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HMRC internal manual

Company Taxation Manual

Close companies: tests: introduction

In determining whether a company is a close company, you should consider the questions below.

  1. Is the company within one of the specific exceptions that exclude it from being a close company (CTM60105)?
  2. Who are the participators (see CTM60107 and CTM60110) in the company and what powers or rights do they possess or are they entitled to acquire?
  3. What rights and powers of other persons are attributable to the participators (CTM60140)?
  4. Having regard to the rights, etc, of each participator, and other persons’ rights, etc, which are attributed to the participator, do:


i) five or fewer participators control the company, or

ii) participators who are directors control the company (CTM60200 onwards)?


  1. would more than half the assets of the company be ultimately distributed to five or fewer participators, or to participators who are directors, in the event of the company being wound up (CTM60320)?


If the company is not within one or other of the specific exceptions and the answer to (d)(i) or (ii) or (e) is ‘yes’, the company is a close company.