Intangible assets: related party rules: definition of control: power to attribute interests of one person to another: ‘connected persons’
CTA09/PART8/S838 and S842 - 843
Rights and powers to be attributed by virtue of ‘connected person’ test
For the purposes set out in the first sub-paragraph of CIRD45180 the rights and powers that may be attributed to a person (A) by virtue of the ‘connected person’ test are rights and powers that:
- are currently held by another person (B),
- B is currently entitled to acquire, or
- B will become entitled to acquire at some future date.
B may be either a person who is connected with:
- A, or
- another person (C) if C is connected with A.
But, if B is only connected to A via C in this way, it is not possible to attribute to A the rights and powers of other persons with whom B is connected.
Definition of ‘connected person’ - sections 842 and 843
There are three types of connection outlined in s843.
Through family ties
A person (A) is connected with another person (B) if B is:
- the spouse or civil partner of A,
- a ‘relative’ of A (brother, sister, ancestor or lineal descendant),
- the spouse or civil partner of a relative of A,
- a relative of A’s spouse or civil partner,
- the spouse or civil partner of a relative of A’s spouse or civil partner.
As a trustee
A person, in the capacity of a trustee of a settlement, is connected with:
- any individual who is the ‘settlor’ of the settlement,
- a person connected (as defined in section 843) with the settlor,
- a body corporate connected with (see below) the settlement.
A settlement includes any disposition, trust, covenant, agreement, arrangement or transfer of assets (ITTOIA05/S620 (3)). A settlor is defined in similarly wide terms - see ITTOIA05/S620 (1)-(2) and TSEM4000 onwards.
A body corporate is connected with a settlement if it is:
- a close company (or would be a close company if it were resident in the UK), and
- has as its participators the trustees of the settlement.
A close company is as defined in CTA2010/S439. See CTM60100 onwards. A participator is as defined in CTA2010/S454 (see CTM60107), subject to the restriction described in CIRD45250.
By virtue of control or a major interest
A person is connected with a company if they are related parties by virtue of the first two tests described in CIRD45105 (CTA09/S835 (2)-(3)).
Points to note
- If B is a ‘connected person’ of A by virtue of the above definition then A is also to be regarded as a ‘connected person’ of B.
- In determining whether a person is connected with a company by virtue of control or a major interest a company is defined as any body corporate or unincorporated association (but not a partnership) and includes a unit trust scheme. See CTM00510 and CTM00520 for the meaning of these terms.
- This definition of a ‘connected person’ is an adapted version of the general definition in CTA2010/S1122. In particular:
- the definition of control in CTA2010/S1124, which applies for the purposes of CTA2010/S1122, is not applied,
- the definition contains nothing equivalent to parts of CTA2010/S1122 (2), sub-section (4) - persons acting together, or to sub-sections (7) and (8) - partnerships.