Definition of a close company

Produced by a Tolley Owner-Managed Businesses expert

Owner-Managed Businesses

Guidance

This guidance note provides a detailed definition of a close company. For guidance on the effects of being a close company, see the Close companies ― overview guidance note.

In summary, the close company rules are targeted at those companies where the owners can manipulate the activities of the company to influence their own tax position.

Therefore, broadly speaking, in most cases an owner-managed company, family company or private company will be close, but in some cases close company status may not be immediately apparent.

When reviewing if a company is close, the following actions should be taken:

•
confirm who are the participators in the company and which are directors
•
establish whether each participator is associated with any others
•
detail what share capital and voting power each participator and their associates have, including any rights which are attributed
•
detail what rights on the winding up of the company each participator and their associates have
•
confirm that the company is not covered by the exceptions to close company status
•
determine

Continue reading the full document

To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™

TAKE A FREE TRIAL NOW

Popular Articles

Employment Tax

Loans provided to employees

Loans provided to employeesEmployers sometimes provide their employees with loans, sometimes charging interest and often not, either as part of the reward package or to help the individual meet significant expenditure. For example, it is common to provide loans for the purchase of annual travel

14 Jul 2020 12:11 | Produced by Tolley Read more

Personal Tax

Simple assessments

Simple assessmentsFrom 2016/17 onwards, HMRC has the power to make a ‘simple assessment’ of the taxpayer’s income tax and / or capital gains tax liability outside of the self assessment system. As HMRC already receives significant amounts of information on the income received and tax paid by

14 Jul 2020 13:40 | Produced by Tolley Read more

Corporation Tax

Corporate interest restriction ― administrative aspects

Corporate interest restriction ― administrative aspectsThe corporate interest restriction (CIR) regime has some specific administrative rules in addition to the general administrative requirements for corporation tax returns. This guidance note does not include commentary on provisions that are

14 Jul 2020 11:19 | Produced by Tolley Read more

Definition of a close company