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HMRC internal manual

Corporate Intangibles Research and Development Manual

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Intangible assets: related party rules: definition of control: power to attribute interests of one person to another: general

CTA09/PART8/S838 - 840 and S842 - 843

These sections describe the requirement to attribute to a person (‘A’) the rights and powers of other persons associated with A in certain specified ways. The rules are applied in considering whether a person (a natural person or a legal entity) controls a company under either of the first two tests outlined in section 835 (see CIRD45105).

Whether one controls the other (CIRD45150) is relevant not only in directly establishing whether the parties are related but also indirectly, in considering whether one has a ‘major interest’ (CIRD45160) in the other and are therefore related in that way.

Rights and powers to be attributed - outline

The rights and powers that may be attributed to A for this purpose are:

  1. the rights and powers of:
  • a person (‘B’) ‘connected’ with A,
  • other persons connected with B.
  1. the rights and powers of any person which that person must, or may be required to, exercise:
  • on A’s behalf,
  • under A’s direction, or
  • for A’s benefit.
  1. rights and powers which A is entitled to acquire, whether the entitlement is a current one or will only come into existence on some date in the future.

See CIRD45190 for guidance on (1), including the special definition of a ‘connected person’ for the purposes of Part 8.

See CIRD45195 for guidance on (2).

Interests held jointly

There are special rules for rights and powers held jointly, including those in partnerships or held by partnerships. See CIRD45200.