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Commercial interdependence and associated companies

Commercial interdependence and associated...

I have the following situation...

Company M derives all of its income, in the form of management fees, from company H.

Company M, which is a management company, has 3 suppliers, companies S,T and U.

Companies S, T and U derive roughly 50% of their income from M and 50% directly from H.

The shareholders and directors of company M are the sole shareholders of companies S, T and U, the majority (possibly sole) shareholder of H and  A N Other who is the internal accountant of H, so 5 shareholders in M owing 20% each (no one person in control).

My question, as the external accountant of M, S, T and U, is which companies, if any, are associated for corporation tax purposes due to financial interdependence or anything else.

If it is relevant, company H is a full rate corporation tax payer irrespective of the existence of the other companies.

Please note I am only after answers regarding the CT and associated company rules. Please no comments about IR35 or disguised remuneration, thanks!


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15th May 2012 10:00

Commercial interdependence...

... is only relevant in determining whether to attribute the rights of a person's associates in order to determine whether two or more companies are under common control.

So if the shareholders of M, H, S, T, U are not relatives, I can't see how any of the companies can be associated by virtue of the shareholdings alone.

You would also need to consider indebtedness between the companies, particularly with respect as to whom would receive the majority of the companies' (gross) assets on a winding up.

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