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.

[F1 (3) A person, in his capacity as trustee of a settlement, is connected with—

(a) any individual who in relation to the settlement is a settlor,

(b) any person who is connected with such an individual, and

(c) any body corporate which is connected with that settlement.

• In this subsection “settlement” and “settlor” have the same meaning as in Chapter IA of Part XV (see section 660G(1) and (2)).

(3A) For the purpose of subsection (3) above a body corporate is connected with a settlement if—

(a) it is a close company (or only not a close company because it is not resident in the United Kingdom) and the participators include the trustees of the settlement; or

(b) it is controlled (within the meaning of section 840) by a company falling within paragraph (a) above.]

(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 [F2 (including an open-ended investment company)] 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.

Textual Amendments

F1 S. 839(3)(3A) substituted for s. 839(3) (with effect in accordance with s. 74(2) of the amending Act) by Finance Act 1995 (c. 4), Sch. 17 para. 20

F2 Words in s. 839(8) inserted (28.4.1997) by The Open-ended Investment Companies (Tax) Regulations 1997 (S.I. 1997/1154), reg. 15

Modifications etc. (not altering text)

C1 S. 839 applied by Finance Act 1991 (c. 31, SIF 63:1), ss. 104(3), 112(7)(b)

S. 839 applied by 1983 c. 55, Sch. 4A para. 1(5) (as inserted (1.12.1992 for specified purposes and 1.1.1993 otherwise) by Finance No. 2 Act 1992 (c. 48), s. 14(2), Sch. 3 Pt. I para. 62; S.I. 1992/2979, art. 4, Sch. Pt. II; S.I. 1992/3261, art. 3,Sch.)

S. 839 applied (27.7.1993) by 1993 c. 34, s. 193(6)

C2 S. 839 applied (with effect in accordance with s. 127(19) of the affecting Act) by Finance Act 1995 (c. 4), s. 127(17)

C3 S. 839 applied (29.4.1996) by Finance Act 1996 (c. 8), Sch. 9 para. 15(7)

S. 839 applied (with effect in accordance with s. 105(1), Sch. 13 para. 8(1) of the affecting Act) by Finance Act 1996 (c. 8), Sch. 13 para. 8(3) (with Sch. 13 para. 6)

C4 S. 839 applied by Finance Act 1986 (c. 8), s. 80B(1) (as inserted by Finance Act 1997 (c. 16), s. 97(1)(4)(6); S.I. 1997/ 2428, art. 2)

S. 839 applied by Finance Act 1986 (c. 8), s. 88B(1) (as inserted by Finance Act 1997 (c. 16), s. 102(1)(4)(6); S.I. 1997/ 2428, art. 2)

C5 S. 839 applied by Finance Act 1994 (c. 9), Sch. 6A para. 1(2) (as inserted by Finance Act 1997 (c. 16), ss. 22(3), 24, Sch. 4)

C6 S. 839 applied by Value Added Tax Act 1994 (c. 23), Sch. 9 Group 2 Note (6) (as substituted by Finance Act 1997 (c. 16), s. 38)

S. 839 applied by Value Added Tax Act 1994 (c. 23), Sch. 10 para. 3A(14) (as inserted by Finance Act 1997 (c. 16), s. 37(3)-(6))

C7 S. 839 applied (19.3.1997) by Finance Act 1997 (c. 16), Sch. 12 para. 25(2)

C8 S. 839 applied (with effect in accordance with s. 48(11) of the affecting Act) by Finance (No. 2) Act 1997 (c. 58), s. 48(10)

C9 S. 839 applied (31.7.1998) by Finance Act 1998 (c. 36), s. 47(10)

S. 839 applied (31.7.1998) by Finance Act 1998 (c. 36), Sch. 11 para. 3(4)

C10 S. 839 applied (27.7.1999) by Finance Act 1999 (c. 16), s. 97(2)(a)

C11 S. 839 applied (28.3.2000) by Finance Act 2000 (c. 17), s. 119(9)(13)

S. 839 applied (with effect in accordance with s. 62 of the affecting Act) by Finance Act 2000 (c. 17), Sch. 14 para. 71(2)

S. 839 applied (with effect in accordance with s. 63(4) of the affecting Act) by Finance Act 2000 (c. 17), Sch. 15 para. 102(3)

S. 839 applied (with effect in accordance with s. 69(1) of the affecting Act) by Finance Act 2000 (c. 17), Sch. 20 para. 25(2) (with Sch. 20 para. 26)

C12 S. 839 applied (with effect in accordance with s. 579 of the affecting Act) by Capital Allowances Act 2001 (c. 2), s. 575(1) (with s. 575(2))

C13 S. 839 applied (with effect in accordance with s. 70(1) of the affecting Act) by Finance Act 2001 (c. 9), Sch. 22 para. 31(4) (with Sch. 22 para. 32)

C14 S. 839 applied (1.4.2002) by The Aggregates Levy (General) Regulations 2002 (S.I. 2002/761), reg. 12(2)

C15 S. 839 applied (1.6.2002) by The Beer Regulations 1993 (S.I. 1993/1228), Sch. 1 (as amended by The Beer and Excise Warehousing (Amendment) Regulations 2002 (S.I. 2002/1265), reg. 2(5)(b))

C16 S. 839 applied (with effect in accordance with s. 55(7) of the affecting Act) by Finance Act 2002 (c. 23), s. 55(5)

S. 839 applied by Finance Act 1996 (c. 8), Sch. 13 para. 9A(5) (as inserted (with effect in accordance with s. 104(5) of the amending Act) by Finance Act 2002 (c. 23), s. 104(3))

S. 839 applied by Alcoholic Liquor Duties Act 1979 (c. 4), s. 36B(8) (as inserted (1.6.2002) Finance Act 2002 (c. 23), s. 4(1)(2), Sch. 1 para. 2)

S. 839 applied (with effect in accordance with s. 53(1) of the affecting Act) by Finance Act 2002 (c. 23), Sch. 12 para. 19(2) (with Sch. 12 para. 20)

S. 839 applied (with effect in accordance with Sch. 13 para. 28 of the affecting Act) by Finance Act 2002 (c. 23), Sch. 13 para. 27(2)

S. 839 applied (with effect in accordance with Sch. 37 para. 2(5) of the affecting Act) by Finance Act 2002 (c. 23), Sch. 37 para. 2(4)(b)

C17 S. 839 applied by The Social Security (Contributions) Regulations 2001 (S.I. 2001/1004), Sch. 4 para. 4A(3) (as inserted (28.11.2002) by The Social Security (Contributions)(Amendment No. 5) Regulations 2002 (S.I. 2002/2929), reg. 5)

C18 S. 839 applied (23.1.2003 with effect in accordance with s. 57(4)(a) of the affecting Act) by Finance Act 2002 (c. 23), s. 57(3), Sch. 16 para. 51(3); S.I. 2003/88, art. 2

C19 S. 839 applied (6.4.2003 with effect in accordance with s. 723(1) of the affecting Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), s. 718 (with Sch. 7)

C20 S. 839 applied (10.7.2003 with effect in accordance with Sch. 19 of the affecting Act) by Finance Act 2003 (c. 14), ss. 45(6), 53(2), 58(5), 108(1), Sch. 4 paras. 1(2), 10(4), 12(2); S.I. 2003/2899, art. 2

C21 S. 839 applied (10.7.2003) by Finance Act 2003 (c. 14), Sch. 26 para. 7(3)

C22 S. 839 applied by Finance Act 2003 (c. 14), Sch. 6A para. 10 (as inserted (1.12.2003) by The Stamp Duty and Stamp Duty Land Tax (Variation of the Finance Act 2003) (No. 2) Regulations 2003 (S.I. 2003/2816), reg. 1, Sch. para. 3(2) (replacing S.I. 2003/2760, reg. 1, Sch. para. 3(2)); and S.I. 2003/2816 is revoked and replaced by Finance Act 2004 (c. 12), Sch. 39 paras. 14, 17(2), 26

C23 S. 839 applied by The Value Added Tax Regulations 1995 (S.I. 1995/2518), reg. 171(7)(8) (as inserted (11.12.2003) by The Value Added Tax (Amendment) (No. 6) Regulations 2003 (S.I. 2003/3220), regs. 1(1)(b), 23)

C24 S. 839 applied (22.7.2004) by Finance Act 2004 (c. 12), s. 278(4) (with Sch. 36)

C25 S. 839 applied (with modifications) (with effect in accordance with s. 84(2) of the affecting Act) by Finance Act 2004 (c. 12), Sch. 15 para. 2

C26 S. 839 applied by Finance Act 2003 (c. 14), s. 45A(10) (as inserted (with effect in accordance with Sch. 39 para. 13(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 39 para. 5(5))

C27 S. 839 applied by Finance Act 2003 (c. 14), s. 44(11) (as inserted (with effect in accordance with Sch. 39 para. 26 of the amending Act) by Finance Act 2004 (c. 12), Sch. 39 para. 15(4))

C28 S. 839 applied by Finance Act 2003 (c. 14), Sch. 6A para. 10 (as inserted (with effect in accordance with Sch. 39 para. 26 of the amending Act) by Finance Act 2004 (c. 12), Sch. 39 para. 17(2))

C29 S. 839 applied (with modifications) by Finance Act 2003 (c. 14), Sch. 15 para. 39 (as substituted (with effect in accordance with Sch. 41 para. 3 of the amending Act) by Finance Act 2004 (c. 12), Sch. 41 para. 1)

C30 S. 839 applied (1.8.2004) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2004 (S.I. 2004/1863), reg. 1(1)(3)

C31 S. 839 applied (1.8.2004) by The Tax Avoidance Schemes (Promoters and Prescribed Circumstances) Regulations 2004 (S.I. 2004/1865), reg. 1(1)(3)

C32 S. 839 applied (24.3.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), ss. 878(5), 883(3)(b)

C33 S. 839(2)-(8) applied (E.W.S.) (16.1.1992) by S.I. 1992/58, art. 8(9)(b), Sch. 1 para. 3

Marginal Citations

M1 Source—1970 s.533.

M2 1958 c. 45.

M3 1940 c. 9 (N.I.)