Paragraph 5

(1)

A company (“A”) is not under the control of another company (“B”) for the purposes of paragraph 2(1) if—

(a)

B is a loan creditor of A,

(b)

there is no other connection between A and B, and

(c)

either—

(i)

B is not a close company, or

(ii)

B's relationship to A as a loan creditor arose in the ordinary course of a business which B carries on.

(2)

Sub-paragraph (3) applies if—

(a)

two companies (“A” and “B”) are under the control of the same person who is a loan creditor of each of them,

(b)

there is no other connection between A and B, and

(c)

either—

(i)

the loan creditor is a company which is not a close company, or

(ii)

the loan creditor's relationship to each of A and B as a loan creditor arose in the ordinary course of a business which the loan creditor carries on.

(3)

In determining under paragraph 2(1) if A and B are connected with one another, rights which the loan creditor has as a loan creditor of A, or as a loan creditor of B, are ignored.

(4)

In sub-paragraph (2)(a) “control” has the same meaning as in paragraph 2(1).

(5)

In this paragraph—

(a)

“close company” is to be read in accordance with Chapter 2 of Part 10 of CTA 2010 (see, in particular, section 439 of that Act),

(b)

“connection” includes a connection in the past as well as a connection in the present and references to a connection between two companies include any dealings between them, and

(c)

references to a loan creditor of a company are to be read in accordance with section 453 of CTA 2010.

Notes on Part 1

Modifications

C1: Sch. 1 Pt. 1 applied (15.9.2016) by Finance Act 2016 (c. 24), s. 101(17)
C2: Sch. 1 Pt. 1 applied (N.I.) (26.5.2020) by The Statutory Sick Pay (Coronavirus) (Funding of Employers' Liabilities) (Northern Ireland) Regulations 2020 (S.I. 2020/513), regs. 1, 4(4)(a)
C3: Sch. 1 Pt. 1 applied (E.W.S.) (26.5.2020) by The Statutory Sick Pay (Coronavirus) (Funding of Employers' Liabilities) Regulations 2020 (S.I. 2020/512), regs. 1, 4(4)(a)