This Practice Note looks at the meaning of connected persons within sections 1122 and 1123 of the Corporation Tax Act 2010 (CTA 2010). An almost identical definition for income tax purposes is contained within section 993 of the Income Tax Act 2007 (ITA 2007).
CTA 2010, ss 1122 and 1123 set out:
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when a company is connected with another company
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when a company is connected with another person
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when an individual is connected with another individual
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with whom a trustee of a settlement is connected, and
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with whom a partner in a partnership is connected
Why is the definition of connected persons important?
The term ‘connected persons’ is applied in various corporation tax and other tax provisions including:
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throughout the Corporation Tax Acts (although a modified definition applies for specific parts)
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for stamp duty land tax (SDLT), land transaction tax (LTT) and land and buildings transaction tax (LBTT) purposes, and
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in relation to the market value rules applicable for stamp duty and stamp duty reserve tax (SDRT) purposes
It is most commonly used
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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Connected persons definition
What does Connected persons mean?
Persons connected with a director of a company as defined in CA 2006, ss 252–255, including members of the director's family, a body corporate with which the director is connected, a person acting in their capacity as trustee of a trust (the beneficiaries of which include the director or persons connected with that director), or a person acting in their capacity as partner of the director (or of a person connected with that director). The relevance of connected persons is emphasised in relation to transactions requiring shareholder approval under CA 2006, Pt 10. In relation to listed companies, Chapter 11 of the Listing Rules regulates the conduct of related party transactions between a listed company and its related parties, the definition of which includes any 'associate’ of that party. The definition of associate can be found in the Glossary to the FCA Handbook and has similarities to the definition of connected persons under the CA 2006.
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