Capital allowances ― groups and connected persons

By Tolley in association with Martin Wilson, the Capital Allowances Partnership Limited
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The following Corporation Tax guidance note by Tolley in association with Martin Wilson, the Capital Allowances Partnership Limited provides comprehensive and up to date tax information covering:

  • Capital allowances ― groups and connected persons
  • Definition of connected persons
  • Transfer of assets
  • Assets other than machinery and plant

Many provisions relating to capital allowances are disapplied or varied where the parties to a transaction are connected.

Definition of connected persons
Individuals

An individual is connected with a person if that person is:

  • the individual’s spouse / civil partner
  • a relative
  • the spouse / civil partner of a relative of the individual or of the individual’s spouse / civil partner

‘Relative’ means a brother, sister, ancestor or lineal descendant. ‘Lineal descendant’ will include any descendant of the spouse by a previous marriage though not a later marriage.

CAA 2001, ss 575–575A, as amended by ITA 2007, Sch 1, para 411
Settlements

A trustee of a settlement is connected with:

  • any individual who is a settlor in relation to that settlement
  • any person who is connected with that settlor
  • a body corporate which is deemed to be connected with that settlement

A body corporate is deemed to be connected with a settlement in any year of assessment if at any time in that year:

  • it is a close company (or only not a close company because it is not resident in the United Kingdom) and the participators then include the trustees of the settlement, or
  • it is controlled (within the meaning of CTA 2010, s 1124 by a company falling as above) (CAA 2001, s 575(3))
Partnerships

Except in relation to acquisitions or disposals of partnershi

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