Partnership poser

My client is a trading limited liability partnership (LLP) with two individual members and a corporate member each with an equity interest. The corporate member supplies the services of one of its directors and incurs related expenditure in particular on director’s remuneration and pension contributions.

However it has no trade of its own. Accordingly a question arises as to how the corporate member may obtain a corporation tax deduction for this expenditure.

One possibility is that it is deductible as management expenses under CTA 2009 Part 16. However in any years where there are excess management expenses this treatment would not allow any carry back.

Furthermore it does not feel correct to deduct these costs as management expenses for the company’s share of the LLP’s profits.

Another view might be that the expenses are incurred wholly...