associated companies again?

associated companies again?

Didn't find your answer?

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

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By nick farrow
30th May 2007 21:16

thanks John R
I am aware of the importance of the loan creditor point and will recommend that Ms. F keeps her indebtedness with F Ltd at a higher figure than Mr & Mrs H - also I take the point re chairman's vote

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Euan's picture
By Euan MacLennan
30th May 2007 12:45

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.

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By nick farrow
30th May 2007 14:25

thanks Euan
thanks Euan - I think I get it now - even tho' the sisters are technically associated the association is disregarded provided no substantal comercial interdependence

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By User deleted
30th May 2007 15:28

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.

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