GLOSSARY

Connected party definition

What does Connected party mean?

Connected parties are certain relatives, trustees, partners and companies.

The following are defined by HMRC under Taxation of Chargeable Gains Act 1992, s 286:

(1) A person is connected to an individual if that person is the individual's spouse or civil partner, a relative of the individual, the spouse or civil partner of a relative of the individual, a relative of the individual's spouse or civil partner, the spouse or civil partner of a relative of the individual's spouse or civil partner. Relative is defined as brother, sister, ancestor or lineal descendant. Relative does not cover all relationships, in particular, nephews, nieces, aunts and uncles

(2) 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;

(3) A person is connected to any person he is in partnership with, and the spouse or civil partner of any person he is in partnership with, and a relative of any person he is in partnership with. Where a transaction takes place between a registered pension scheme and a connected party, the transaction must be made at arm's length terms.


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