C2.110 Connected persons
Where a person disposes of an asset to a person with whom he is connected, the transaction is deemed to be otherwise than by way of a bargain at arm's length1. In consequence, the consideration for the disposal is deemed to be the open market value of the asset at the date of the disposal2. This is so regardless of the actual consideration, if any, or whether the transaction is actually on arm's length terms. The market value of an asset disposed of subject to a restriction enforceable by the transferor must be adjusted in accordance with specific provisions3.
There are a number of different ways in which persons may be connected4. The relevant relationships may be listed under the following headings.
A person is connected with an individual if that person is the individual's spouse, or is a relative5, or the spouse of a relative of the individual or of the individual's spouse6. A husband and wife remain connected, even if they are not living together, until a decree absolute has been granted7. For this purpose 'relative' means brother, sister, ancestor or lineal descendant8.
With effect from 5 December 2005, references to a spouse include references to a civil partner9.
A person, in his capacity as trustee of a settlement, is connected with any
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