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Related party disclosure?

Related party disclosure?

Shareholder of Company A [50% holding] lends the company £x from one of his other companies [Co B]. Co A has 2 shareholders, both owning 50%.

Is an RPT note only required in Co A if he is a Director in Co A, or even if just a 50% shareholder in Co A?

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13th May 2012 20:43

Disclosure required

A 50% shareholder is a significant investor in Company A and is therefore a related party of Company A, regardless of whether he is a director or not.  Although he is related to both Company A and Company B, that does not necessarily make Company A and Company B related.

However, for the small profits rate of corporation tax, Company A and Company B will now be associated because the 50% shareholder has control of Company A because his loan would mean that he is entitled to the majority of the funds in the event of Company A being dissolved (assuming that the other shareholder has not also loaned Company A more than £x).

On the basis that the 50% shareholder has control of both Company A and Company B, they will be related parties and the loan from and interest paid to Company B should be disclosed (with comparatives) in Company A's accounts.

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13th May 2012 22:48

Thanks Euan--as usual very helpful advice from you. Thanks

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