Owner-Managed Businesses

Capital allowances ― groups and connected persons

Produced by Tolley in association with Martin Wilson and Steven Bone
  • 19 Oct 2021 08:20

The following Owner-Managed Businesses guidance note Produced by Tolley in association with Martin Wilson and Steven Bone provides comprehensive and up to date tax information covering:

  • Capital allowances ― groups and connected persons
  • Definition of connected persons
  • Individuals
  • Settlements
  • Partnerships
  • Companies
  • Transfer of assets between connected persons
  • Plant or machinery
  • Assets other than machinery and plant
  • Election by connected persons

Capital allowances ― groups and connected persons

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

Definition of connected persons

Individuals

An individual is connected with aperson if that person is:

  1. the individual’s spouse / civil partner

  2. a relative

  3. the spouse / civil partner of arelative of the individual or of the individual’s spouse / civil partner

‘Relative’ means abrother, sister, ancestor or lineal descendant. ‘Lineal descendant’ will include any descendant of the spouse by aprevious marriage though not alater marriage.

Settlements

A trustee of asettlement is connected with:

  1. any individual who is asettlor in relation to that settlement

  2. any person who is connected with that settlor

  3. a body corporate which is deemed to be connected with that settlement

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

  1. it is aclose company (or only not aclose company because it is not resident in the UK) and the participators then include the trustees of the settlement, or

  2. it is controlled (within the meaning of CTA 2010, s 1124 by acompany falling as above)

Partnerships

Except in relation to acquisitions or disposals of partnership assets pursuant to bona fide commercial arrangements, aperson is connected with any person with whom he is in partnership, and with the spouse / civil partner or relative of any individual with whom he is in partnership.

Companies

A company (including any body corporate or unincorporated association) is connected with another company if either:

  1. the same person has control of both, aperson has control of one and persons connected with him or he and persons connected with him have control of the other

  2. a group of two or more persons has control of each company and the groups either consist of the same persons, or could be regarded as consisting of the same persons, by treating (in

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