A + B = Control

IT HAS BECOME increasingly clear from the cases with which I have dealt over the last 12 months that the Inland Revenue is paying far more attention to whether companies are associated or not. The consequences of associated company status can affect the tax payable when some or all of the those companies fall within the starting or lower rate bands for corporation tax purposes.

Widely drawn legislation

The legislation has always been widely drawn. TA 1988 s 13(4) and s 416 are particularly relevant and extracts are given below:

'(4) … for the purposes of this section a company is to be treated as an "associated company" of another at a given time if at that time one of the two has control of the other or both are under the control of the same person or persons.

'In this subsection "control" shall be...