Connected company definition

/kəˈnɛktɪd/ /ˈkʌmp(ə)ni/

What does Connected company mean?

For the purposes of the tax treatment of loan relationships of companies, a company is connected to another where one company controls the other or both are controlled by the same person. In this respect control means the power of a person to secure that the affairs of a company are conducted in accordance with their wishes. If the parties are connected at any time in an accounting period, they are held to be connected for the whole of that period. 

Special tax rules exist for impairments and releases of debts between connected companies which mean there are circumstances where the accounting credits and debits arising on an impairment or release are either restricted for tax purposes or not required to be brought into account. 

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