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When are parties connected under the loan relationship rules?


In the straightforward scenario whereby Mr A and Mr B each own 50% of X Ltd and Y Ltd respectively with no tie-breaker rights are the two companies deemed to be connected under the loan relationship provisions?


Tax practitioners will of course be aware that there are various definitions of what we mean by ‘connected’ for tax purposes. CTA 2009 s 466 states that under the loan relationship rules two companies are connected if one ‘controls’ the other or they are under the control of the same person. Section 472 then tells us that control is defined as the power of a person to secure that the affairs of the company are conducted in accordance with their wishes by...

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