(1)Any question whether a person is connected with another shall for the purposes of this Act be determined in accordance with the following subsections 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 husband or wife, or is a relative, or the husband or wife of a relative, of the individual or of the individual’s husband or wife.
[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 of the Taxes Act (see section 660G(1) and (2) of that Act).
(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 of the Taxes Act) 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 husband or wife or a 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 2 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 2 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 “relative” means brother, sister, ancestor or lineal descendant.
Textual Amendments
F1S. 286(3)(3A) substituted for s. 286(3) (with effect in accordance with s. 74(2) of the amending Act) by Finance Act 1995 (c. 4), Sch. 17 para. 31