Readers' forum: Common control

10 June 2019

Issue: 4699 / Categories: Forum & Feedback

The extent of the annual investment allowance.

My clients own two standalone companies each with the same four shareholders owning 25% of the shares so that no one person controls the company. Both companies regularly exceed the annual investment allowance because they are continuously reinvesting in fixed assets to grow the businesses.

Previously I have advised the client that the two companies must share one annual investment allowance since they are under common control and are related given the similar trades. However on revisiting CAA 2001 s 574 I am inclined to think that there is no common control since no one shareholder has control nor are they obliged by any agreement that they act together to exercise control.

I should like to hear readers’ views on the application of s 574 and whether there is one shared annual investment allowance. Alternatively does each company have its own annual investment allowance in the...

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