At a course today, it was suggested that where a company is owned 50/50 and there are no tie-breaker provisions whatsoever then the assumption that no one person controls the company may be a dangerous one, if there are credit participators' loans around, particularly the 'normal' fluctuating directors' loan accounts. Do such loan accounts count for control purposes and has anyone out there had experience of HMRC successfully arguing additional associated companies on the strength of this?
David Lochhead
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Control
Yes refer to ICT88 S416 (2) (c) reproduced below:
S416 Meaning of “associated company” and “control”
(2) For the purposes of this Part, a person shall be taken to have control of a company if he exercises, or is able to exercise or is entitled to acquire, direct or indirect control over the company's affairs, and in particular, but without prejudice to the generality of the preceding words, if he possesses or is entitled to acquire—
(c) such rights as would, in the event of the winding-up of the company or in any other circumstances, entitle him to receive the greater part of the assets of the company which would then be available for distribution among the participators.