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HMRC internal manual

Corporate Finance Manual

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HM Revenue & Customs
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Loan relationships: connected parties: late interest: major interest: example

Meaning of ‘major interest’: example

AT Inc and BY Inc, both non-close companies, each have a 45% holding in DX Ltd. CF GmbH has a 10% holding. AT Inc, BY Inc and CF GmbH each lend £100,000 to DX Ltd.

AT Inc

AT Inc is not connected to DX Ltd through control - it only has a 45% holding.

AT Inc is not connected to DX Ltd through participation - because DX Ltd is not a close company (it is controlled by two or more non-close companies - see CTM60290).

However, AT Inc is connected to DX Ltd through holding a major interest, as

  • AT Inc and BY Inc together control DX Ltd
  • each have at least a 40% interest in DX Ltd
  • AT Inc and BY Inc are each the creditor, and DX Ltd the debtor, in a loan relationship. (For accounting periods beginning on or after 17 March 2004, it is not necessary for both AT Inc and BY Inc to have debtor or creditor relationships with the company for connection to be established.)

BY Inc

The result is the same as for AT Inc.

CF GmbH

CF GmbH is not connected to DX Ltd through control - it only has a 10% holding.

CF GmbH is not connected to DX Ltd through participation - because DX Ltd is not a close company.

CF GmbH, together with either AT Inc or BY Inc would control DX Ltd, through holding 55% of the shares, but as CF GmbH does not have at least a 40% holding in DX Ltd, it cannot be connected through having a major interest.

CF GmbH and DX Ltd are not connected.