Mr and Mrs H control H Ltd (shares held 60% :40%).
Mrs H forms new co with her sister Ms. F called F Ltd - the shares are held 50% Ms F, 30% Mrs H, 20% Mr H.
Are H Ltd and F Ltd associated for SCR band purposes?
If either Mr and Mrs H or Ms F form further new cos will they also be associated?
nick farrow
Replies (4)
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Not associated
As neither Mr & Mrs H nor Ms F appear to have overall control of F Ltd, it is not associated with H Ltd, unless there is substantial commercial interdependence between H Ltd and F Ltd, in which case Ms F will be counted as an associate of Mrs H, along with Mr H.
Any further company in which Mr & Mrs H and Ms F together hold a majority of the shares will be associated with F Ltd.
Not necessarily that simple
If Mr or Mrs H have a chairman's casting vote in F Ltd then their combined 50% holding will result in control.
Also, remember that it is not simply the shareholdings that will determine whether the companies are associated. For example, if on a winding up of F Ltd, Mr and Mrs H would receive the majority of the assets (e.g. due to a loan account) then this could result in control for this purpose.
I would suggest you have a good read of your text books and/or the Revenue internal manuals covering this subject as the tax at stake can be substantial.