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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Employment income provided through third parties: persons 'linked' with A

Section 554Z1 ITEPA 2003

Very broadly speaking, there are three ways in which a person can be ‘linked’ with A:

  • by being ‘connected’ with A,
  • by being a close company with which A has an association, or
  • by being a 51% subsidiary of such a company.

The statute spells out the details - and amplifies them.

‘Connected’ person

Any person who is connected with A is linked with A.

So is any person who has been (but is no longer) connected with A.

Persons linked with A like this are within Section 554Z1(1)(a).

‘Connected’ has the meaning given by Section 993 ITA 2007.

If a couple are living together as if they were married or civil partners, you treat them when applying Section 993 for these purposes as if they actually were married or civil partners.

Close company

If A is (or has been) a participator in a close company, that company is linked with A.

If any person within Section 554Z1(1)(a), (c) or (d) is (or has been) a participator in a close company, that company is linked with A.

Companies linked with A like this are within Section 554Z1(1)(b).

On close companies, see CTM60000 onwards.

On participators in close companies, see CTM60107 onwards.

Non-UK ‘close’ company

Suppose a company would be a close company, except that it is non-UK resident.

If A is (or has been) a participator in such a non-UK company, that company is linked with A.

If any person within Section 554Z1(1)(a), (b) or (d) is (or has been) a participator in such a non-UK company, that company is linked with A.

A ‘participator’ in such a non-UK company is a person who would be a participator if the company was a close company.

Companies linked with A like this are within Section 554Z1(1)(c).

51% subsidiary

If a company (Company X) is a 51% subsidiary of a company within Section 554Z1(1)(b) or (c), Company X is linked with A.

‘51% subsidiary’ has the meaning given by Part 24 Chapter 3 CTA 2010.

Companies linked with A like this are within Section 554Z1(1)(d).