Close companies: extended meaning of distribution: companies acting in concert
CTA2010/S1067 (formerly ICTA88/S418 (7))
Where each of two or more close companies makes a payment (or gives any consideration or provides any facilities) to a person who is not a participator (or an associate of a participator) in that company but is a participator (or an associate of a participator) in another of those companies, and
- the payment, etc, would be within CTM60520 if it were made to a participator, and
- the companies are acting in concert or under arrangements made by any person, the payments, etc, are to be treated as distributions.
For example, if Company A (with a participator X) and Company B (with a participator Y) arrange for:
- Company A to make a payment etc, to Y which, if Y were a participator (or an associate of a participator) in Company A, would be a distribution under CTM60520, and
- Company B to make such a payment to X,
each of the two companies is regarded as having made a payment that is a distribution.
As regards liability under CTA2010/S455 (formerly ICTA88/S419) following reciprocal arrangements for loans or advances, see CTM61670.