Associated agonies

KEY POINTS

• Are the associated company rules working as originally intended?
• Increased liabilities resulting from 'unsuspecting associates'.
• Are the rules inhibiting entrepreneurship?
• The effect of the legislation and concession.
• Are the rules operating 'fairly'?

The rules on associated companies (TA 1988 s 616 et seq.) continue to annoy our readers and Simon White (Tayabali Tomlin & White Chartered Accountants & Registered Auditors) has just brought this back into my mind with his letter.

'I have just re-read your June 2006 article on associated companies ['Associated problems' see Related Links above]. I wholeheartedly agree with the view that the rules have an unfortunate side-effect of penalising entrepreneurialism. The article came back into my mind because we have a client who runs a successful limited company whose profits fall below the marginal corporation...