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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Legal background: connected persons

Other than any specific reference to the meaning of ‘connected persons’ for IHT, whether a person is connected with another has to be decided by reference to TCGA92/S286. The subsections are below

  • 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.