Income and Corporation Taxes Act 1988

839 Connected persons. U.K.

M1 (1) For the purposes of, and subject to, the provisions of the Tax Acts which apply this section, any question whether a person is connected with another shall be determined in accordance with the following provisions of this section (any provision that one person is connected with another being taken to mean that they are connected with one another).

(2) A person is connected with an individual if that person is the individual’s wife or husband, or is a relative, or the wife or husband of a relative, of the individual or of the individual’s wife or husband.

(3) A person, in his capacity as trustee of a settlement, is connected with any individual who in relation to the settlement is a settlor, with any person who is connected with such an individual and with a body corporate which, under section 681 is deemed to be connected with that settlement (“settlement” and “settlor” having for the purposes of this subsection the meanings given by subsection (4) of that section).

(4) Except in relation to acquisitions or disposals of partnership assets pursuant to bona fide commercial arrangements, a person is connected with any person with whom he is in partnership, and with the wife or husband or relative of any individual with whom he is in partnership.

(5) A company is connected with another company—

(a) if the same person has control of both, or a person has control of one and persons connected with him, or he and persons connected with him, have control of the other; or

(b) if a group of two or more persons has control of each company, and the groups either consist of the same persons or could be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person with whom he is connected.

(6) A company is connected with another person if that person has control of it or if that person and persons connected with him together have control of it.

(7) Any two or more persons acting together to secure or exercise control of a company shall be treated in relation to that company as connected with one another and with any person acting on the directions of any of them to secure or exercise control of the company.

(8) In this section—

• “company” includes any body corporate or unincorporated association, but does not include a partnership, and this section shall apply in relation to any unit trust scheme as if the scheme were a company and as if the rights of the unit holders were shares in the company;

• “control” shall be construed in accordance with section 416; and

• “relative” means brother, sister, ancestor or lineal descendant.

In relation to any period during which section 470(2) has effect the reference above to a unit trust scheme shall be construed as a reference to a unit trust scheme within the meaning of the M2 Prevention of Fraud (Investments) Act 1958 or the M3 Prevention of Fraud (Investments) Act (Northern Ireland) 1940.

Modifications etc. (not altering text)

C1 See—1970 s.281(5)—dividend stripping.1973 Sch.15 para.6—collection of tax assessed on non-residents.1975(O) Sch.3 para. 1—Oil Taxation Acts—definition of arms length sale.1976(D) Sch.1 paras.14(3), 17(5)—Development Land Tax—interests in leases. 1976(D)repealed by 1985 ss.93, 98(6)and Sch.27 Part Xwith effect from 19March 1985.1983 Sch.8 Part III para.11(2)—Oil Taxation Acts—receipts to be set against allowable expenditure.1983(O) s.15(4)—Oil Taxation Acts—application for the purposes of 1983(O).1987 s.64(3)and Sch.13 para.11(2)—Oil Taxation Acts—relief for certain research expenditure.1987 Sch.10 para.8(4)—Oil Taxation Acts—nomination scheme for disposals and appropriations.1988 s.13A—close investment-holding companies.1988 s.24(1)—interpretation of Sch.A.1988 s.34(7)—premiums etc., treated as rent.1988 s.36—Sch.Dcharge on sale of land with right of reconveyance.1988 s.79A—contributions to training and enterprise councils and local enterprise companies.1988 s.116(7)—partnerships involving companies: effect of arrangements for transferring relief.1988 s.140—company directors and employees granted rights to acquire shares.1988 s.142(3B)—credit tokens.1988 s.146—living accommodation provided for employee: additional charge.1988 s.155(7)—benefits in kind for directors etc.1988 s.162—employee's shareholdings.1988 s.165(6)—scholarships.1988 s.187—approved share option schemes.1988 s.312—business expansion scheme.1988 s.339(7)—charges on income: donations to charity.1988 s.355(5)—loans for purchase or improvement of land.1988 s.395—leasing contracts: effect on loss relief where company reconstructed.1988 s.410and Sch.18 para.1(8)restrictions on entitlement to group relief.1988 s.451(3)—life policies: computation of gain.1988 s.494—Oil Taxation Acts—oil extraction activities; charges on income.1988 s.497—Oil Taxation Acts—ACT on redeemable preference shares.1988 s.520-521—patent rights.1988 s.736—company dealing in securities: distribution materially reducing value of holding.1988 s.756—controlled foreign companies.1988 s.763—offshore funds.1988 s.769—change in ownership of company: disallowance of trading losses.1988 s.776(13)—artificial transactions in land.1988 s.786—transactions associated with loans or credit.1988 s.798—double taxation relief: interest on certain overseas loans.1988 s.812—withdrawal of right of certain non-resident companies to payment of tax credits.1988(F) Ch.II Part III—unapproved employee share schemes.1988(F) Sch.8 para.12(2C)—Oil Taxation Acts—disposals of certain shares deriving value from exploration or exploitation assets or rights.1989 s.94—and Sch.11 para.8—deep gain securities.1990(C) s.5(1)—restriction of balancing allowances for industrial buildings etc.1990(C) s.11(6)—capital allowances for buildings on long leases.1990(C) s.25—donations to charity by individuals.1990(C) s.26(1)(3)—disposal value of machinery or plant.1990(C) s.50(6)—new expenditure on assets leased outside the UK.1990(C) ss.53(2), 55(3) and 56—capital allowances for fixtures.1990(C) s.75(4)—arrangements to secure benefit of 1990(C) Part I Ch.II.1990(C) s.76—restriction of capital allowances for machinery and plant.1990(C) s.77—successions to trades between connected persons.1990(C) s.86(3)—qualifying dwelling houses.1990(C) s.130(1)(c)—restriction of balancing allowances on sale of agricultural buildings.1990(C) s.142—restriction of first-year allowances.1990(C) s.154(3)—contributions to capital expenditure.1990(C) s.157(1)(a)—sales between connected persons.1990 s.56 and Sch.10 para.17—convertible securities.S.I. 1987 No.530—entertainers and sportsmen (in Part III Vol.5).S.I. 1987 No.1338 and S.I. 1990 No.2469—excluded oil.S.I. 1990 No.1671—movements of capital (in Part III Vol.5).See also 1979(C) s.63—with definition of

“control”

in 1979(C) s.155(1)—corresponding provision for capital gains tax.Gas Act 1986 (c.44) s.63(9)—restrictions on use of certain information.

Marginal Citations

M1 Source—1970 s.533.

M2 1958 c. 45.

M3 1940 c. 9 (N.I.)