Commentary on Sections Overview Overview Section 348: Introduction: meaning of “connected companies relationship”
1127.This section provides the meaning of “connected companies relationship”. It is based on section 87(1), (3) and (5) of FA 1996.
1128.“Person” in section 87(1), (3) and (5) of FA 1996 has been rewritten as “company”. See Change 56 in Annex 1.
1129.Section 87(5) deals with intermediaries between two connected companies through which a loan is “dog-legged”. Such intermediaries may be individuals. This has been rewritten in this section by treating debtor and creditor relationships separately. Paragraph (b) of subsections (2) and (4) is necessary because loans between individuals do not fall into the definition of a loan relationship in section 81(1) of FA 1996.
1130.Subsection (6) brings out more clearly than in the source legislation (section 87(3) of FA 1996) that where there is a connection at any time in an accounting period there is a connected companies relationship for the whole of the period.