The income treated as received by the individual under the anti-avoidance provisions of ITA 2007, s. 805 is calculated by using five statutory steps, as follows (s. 806). If the result is a negative figure, the income is nil.

Step 1

At the end of the tax year, calculate the amount of claimed losses (so far as relating to the licence) made by the individual in the trade in any ‘early tax year’ during which the individual carried on the trade as a ‘non-active partner’. See ¶291-040 for definitions of these terms.

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