Small companies Rate - Loan Creditor

[GL]

Company A has its shares owned between adults siblings 1:1:1 and company B has the same shareholders but split 5:4:1. In respect of a period ending prior to April 2011 on the basis of the details above as far as I am concerned companies A&B (both active) are not associated.

They do not trade with each other but Company A owes Company B an amount which equates to about 20% of the balance sheet value (of A). In respect of Company B the debtor balance equates to around 60% of its balance sheet value.

In my view, the companies based on all of the above are still not associated. I believe that had the creditor company shown the 'loan' to be in excess of 50% of its balance sheet value the answer may have been different or at least worthy of consideration.

All comments welcome.

[tom 7000]

A and B together control both companies? So I thought...


CTM03710 - Corporation Tax: small companies: associated companies
For the purposes of ICTA88/S13 (4), a company is an associated company of another at a given time if at that time:

one of the companies has control of the other, or
both of the companies are under the control of the same person or persons ( CTM03730).
Control for this purpose is construed in accordance with ICTA88/S416. See the instructions at CTM60210 to CTM60230 regarding the meaning of control and the instructions at CTM03790 and CTM03810 regarding the concessional treatment of companies controlled by certain loan creditors or trustees.


heres the link

http://www.hmrc.gov.uk/manuals/ctmanual/CTM03710.htm