Where two companies are controlled by the same individual participators the two are associated as they are under common control. We recently pointed out that some people are forgetting that any offshore company which is undertaking any trade or investment business should be included when you consider whether a UK company has associates. A new point has come up, as follows:

From April 2011 new associated company rules mean that you are only required to attribute the rights of any associates of participators to the participators if there is substantial commercial interdependence between the companies. So from this date, for example:

  • if a husband controls one company and his wife another company the two will only be associated where there is substantial commercial interdependence between the two companies, or 
  • conversely, if the husband and wife jointly own (50:50) two companies the two are associated, or if either husband or wife controls two companies they will also both be associated.
  • Civil partnerships are treated identically to married couples. If you have persons co-habiting they are not each other's associates if unmarried or un-civil partnershipped!

Some accountants have reported to us that the new rules are stated incorrectly on a couple large websites.