Legal background: connected persons
Other than any specific reference to the meaning of ‘connected persons’ for Inheritance Tax, whether a person is connected with another has to be decided by reference to TCGA92/S286. The subsections are as follows:
TCGA92/S286 (1): any provision that one person is connected with another is to be taken as meaning they are connected with one another.
TCGA92/S286 (2): a person is connected with an individual (X) if that person is
- the husband, wife or civil partner (IHTM11032) of X, or
- a relative of X, or
- the husband, wife or civil partner of a relative of X, or
- a relative of the husband, wife or civil partner of X.
TCGA92/S286 (3): a person in his capacity as trustee of a settlement is connected with
- the settlor, and
- any person connected with the settlor, and
- any body corporate connected with the settlement.
TCGA92/S286 (3A): a body corporate is connected with a settlement if
- it is a close company and the participators include the trustees of the settlement, or
- it is controlled by such a close company.
TCGA92/S286 (4): a partner (except in relation to acquisitions or disposals of partnership assets pursuant to bona fide commercial arrangements) is connected with
- any person he is in partnership with, and
- the husband, wife or civil partner of any person he is in partnership with, and
- a relative of any person he is in partnership with.
TCGA92/S286 (5): a company is connected with another company if
- the same person has control of both, or
- the persons controlling both companies are connected, or
- there are certain common links of control.
TCGA92/S286 (6): a company is connected with another person if
- that person has control of the company, or
- that person and persons connected with him together have control of the company.
TCGA92/S286 (7): persons acting together to secure or exercise control of a company are connected with
- each other, and
- persons acting on their direction.