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SEIS and control issue

Co. A is controlled by a single shareholder who also controls another co. Can Co. A claim SEIS

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ITA 2007 states

257DG(1)  The control element of the requirement is that–

(a)the issuing company must not at any time in period A control (whether on its own or together with any person connected with it) any company which is not a qualifying subsidiary of the issuing company, and

Company A, which is controlled by a single shareholder, wishes to raise some investment through SEIS.  The same shareholder that controls company A also controls a seperate Company B.  Company A does not own any shares in Company B.

The fact that the same shareholder controls both companies does this mean that Company A falls foul of 257DG(1) above.  In otherwords can it be argued that Company A could control Company B and therefore fails this test.

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16th May 2019 09:12

What you need to do is look up the RELEVANT definition of "control".

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to Tax Dragon
16th May 2019 09:40

Thank you. I believe it is section 450 and 451 of CTA 2010 that is relevant.

The legislation states ......(whether on its own or together with any person connected with it).... What I am struggling with is whether the fact that Company A does not own any shares in Company B mean that company A can not exercise any control in its own right over company B. The legislation states "together with".

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to Athos Louca
16th May 2019 09:57

You're right. It's not what it says in VCM34080, but it is what it says in s257HJ(3). I wasn't expecting that, I'll be honest :-/

So you're looking at s451(4) and attribution? Agreed. But is a shareholder in a company an associate of that company?

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to Tax Dragon
16th May 2019 10:25

In this case the shareholder is the controlling shareholder.

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to Athos Louca
16th May 2019 10:30

But s451 refers to "associate" (s448), not "associated company" (s449).

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to Tax Dragon
16th May 2019 11:01

I don't believe that the OP is talking about attribution under CTA 2010, s 451(4).

I believe the OP is talking about the "together with" attribution in ITA 2007, s 257DG(1)(b).

That is to say X controls company B and X is connected to company A (by reason of controlling it). Therefore, whilst company A has no interest in company B, it is controlled by a person connected with company A. So, can it be said that company B is controlled by company A and X together.

IMO "together with" must be taken to mean that if company A does not have any interest of its own in company B, it is not necessary to add X's interest in company B to it.

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to Vile Nortin Naipaan
16th May 2019 12:05

Yes. See my reply below (timed before yours but appearing after it... I love Aweb's format).

My understanding was that if X alone controls A, then - although it's therefore true that X+Y control A (whoever or whatever Y is) - Y does not enter into the control equation.

That's different from what you have said... which (on current form) makes me think I am wrong.

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to Athos Louca
16th May 2019 10:58

Sorry, I somehow missed

Athos Louca wrote:

What I am struggling with is whether the fact that Company A does not own any shares in Company B mean that company A can not exercise any control in its own right over company B. The legislation states "together with".

I've been addressing a different question.

"Together with" applies when each party contributes a measure of control. (If the interpretation that concerns you was right, you wouldn't need s451 etc.)

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