Revenue Note for Guidance

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Revenue Note for Guidance

10 Connected persons

Summary

This section provides the rules for deciding whether one person is connected with another person for the purposes of the Tax Acts and the Capital Gains Tax Acts. The section applies for those purposes except where the context otherwise requires.

Details

Definitions

(1)close company” is defined by reference to sections 430 (meaning of “close company”) and 431 (certain companies with quoted shares not to be close companies).

company” has the same meaning as it has in the Corporation Tax Acts and as is set out in section 4(1).

control” is to be construed in accordance with section 432 (meaning of “associated company” and “control”).

For the purposes of the Tax Acts, “relative” is a brother, sister, ancestor (that is, grandparent, great-grandparent, etc) and lineal descendants (that is, children, grandchildren, etc). For the purposes of the Capital Gains Tax Acts, “relative” in addition to the preceding persons also includes an uncle, aunt, niece and nephew.

settlement” is defined in very broad terms as including any disposition, trust, covenant, agreement or arrangement and also any transfer of money or other forms of property or of any right to money or other forms of property.

settlor” is the person who either directly or indirectly makes or enters into the settlement, and includes a person —

  • who either directly or indirectly may have provided or undertaken to provide funds for the settlement, or
  • who enters into a reciprocal arrangement with another person for that other person to make or enter into a settlement.

Connected persons

(2) Where a rule provides that one person is connected with another person, this is to be taken as meaning that the converse also applies, namely, that the other person is connected with the first person.

(3) The following persons are connected —

  • an individual and his/her spouse,
  • an individual and his/her civil partner,
  • an individual and a relative of the individual,
  • an individual and a relative of the individual’s spouse,
  • an individual and a relative of the individual’s civil partner,
  • an individual and the spouse of a relative of the individual,
  • an individual and the civil partner of a relative of the individual,
  • an individual and the spouse of a relative of the individual’s spouse,
  • an individual and the civil partner of a relative of the individual’s civil partner,
  • (4)(a) a trustee of a settlement and the settlor of the settlement (if the settlor is an individual),
  • (4)(b) a trustee of a settlement and any person who is connected with the settlor of the settlement (if the settlor is an individual),
  • (4)(c) a trustee of a settlement and a body corporate which at any time in any accounting period or year of assessment is a close company (including a company which would be a close company except for the fact that it is not resident in the State) the participators in which include the trustees of the settlement or a beneficiary under the settlement,
  • (5) a person and a business partner of the person (except where partnership assets are bought or sold under bona fide commercial arrangements),
  • a person and the spouse or civil partner of a business partner of the person (except where partnership assets are bought or sold under bona fide commercial arrangements),
  • a person and a relative of a business partner of the person (except where partnership assets are bought or sold under bona fide commercial arrangements),
  • (6)(a) a company and another company where the same person has control of both companies,
  • a company and another company where a person has control of one company and persons connected with that person or that person and persons connected with that person have control of the other company,
  • (6)(b) a company and another company where a group of 2 or more persons has control of each company and the groups consist of the same persons or could be regarded as consisting of the same persons if a member of either group was replaced by a person connected with that member,
  • (7) a company and a person where the person has control of the company or the person and persons connected with the person control the company.

(8) The members of a group of 2 or more persons who act together to obtain control of, or a holding in, a company are (in relation to that company) treated as connected with one another. The group members are also treated as connected with any person acting on the direction of any member of the group to obtain control of, or a holding in, the company.

Relevant Date: Finance Act 2018