Connected party disposals

Produced by Tolley in association with Jackie Barker of Wells Associates

The following Corporation Tax guidance note Produced by Tolley in association with Jackie Barker of Wells Associates provides comprehensive and up to date tax information covering:

  • Connected party disposals
  • Deemed consideration
  • Use of allowable losses
  • Series of disposals to connected parties
  • Close company transfers at undervalue
  • Practical points

Connected party disposals

This note explains the general rules that apply in respect of the disposal of company assets to connected parties and highlights the issues that differ from a transaction between unconnected third parties.

A company is connected with another company if:

  1. the same person or group of persons control both companies

  2. a person controls one company and persons connected with him control the other

  3. a person controls one company and he, along with other persons connected with him, control the other

A company is connected with another person if that person controls it alone or alongside persons connected with him.

Where two or more persons are acting together in order to obtain control of a company, they will be treated as connected with one another but only for the purposes of any transactions with that company. For example, directors of a company who have no other connection will not be treated as connected parties in respect of trans

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