Annex 1: Minor changes in the law Change 3: Small profits rate and marginal relief: relaxations in the test for being an associated company: sections 25 and 28 to 30 and Schedule 1(section 99 of CAA) Paragraph 4: Trustees
Under section 416(1) of ICTA a company is associated with another if one controls the other or both are under common control. ICTA does not specifically exclude control which is established by rights and powers held on trust. By concession, such rights and powers are ignored.
Section 474(1) of ITA (which applies also for corporation tax purposes – see section 1169 of this Act) substitutes a notional person for the trustees. That notional person is not a company and so cannot be an associated company. It follows that ESC C9 is not needed to prevent a trustee company and a company which it controls from being treated as associated. Similarly, if section 474(1) of ITA treats the trustees of two settlements as separate notional persons, the concession is not needed to prevent two companies controlled by different settlementsfrom being treated as associated.
The concession applies only if the rights and powers in two companies are held by the trustees of a single settlement. Section 30 enacts this part of the concession.