Chapter CA23090
| Published date | 16 April 2016 |
| Record Number | CA23090 |
A company is related to another company in a financial year (year from 1 April to the following 31 March) if one or both of conditions (a) and (b) below are met in relation to the companies in that financial year.
Unincorporated businessesA qualifying activity (that is not carried on by a company) is related to another such qualifying activity in a tax year (year from 6 April to following 5 April) if one or both of
(a) the shared premises condition, and
(b) the similar activities condition
are met in relation to the qualifying activities in that tax year.
You should note that the two conditions are applied to companies under common control and unincorporated businesses under common control completely separately. There is no rule that requires a taxpayer to consider whether, for example, a company he controls should be treated as “related” to a self-employed business he owns, or whether his company should be treated as related to a partnership in which he has a controlling interest.
This condition is met where a business carries on its qualifying activity from premises, and another business under common control also carries on its qualifying activity from the same premises at the end of the relevant chargeable period of either business. The term “premises” is not defined in the legislation so has its normal everyday meaning.
Remember that this condition is applied separately to -
- two or more companies under common control, and
- two or more unincorporated businesses under common control.
It is not considered that the shared premises condition would be met in circumstances where (say) a farmer, who runs an on-going dairy farming business on his farm, as well as a furnished holiday letting business from a cottage on his farm, does some paperwork for both in the sitting room of his farmhouse at nights. The qualifying activity of farming and of furnished holiday letting is not conducted from the same, shared premises: one is conducted from the fields, barns and out-houses, the other from a cottage on the land. The fact that some administrative work in relation to both qualifying activities may be carried out from the business owner’s home is not relevant to determining the premises where the qualifying activity is actually conducted.
Here is an example of “shared premises” in relation to each legal form of business:-
Example 1In the 2009 financial year, Blue...
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