INTM550610 - Hybrids: definition of key terms: control groups and related persons

Control groups

Control groups are defined by s259NB. A person (A) is in the same control group as another person (B)

  • throughout any period for which they are consolidated for accounting purposes, or
  • on any day on which the participation condition is met in relation to them, or
  • on any day on which the 50% investment condition is met in relation to them

Consolidated for accounting purposes

A and B are consolidated for accounting purposes for a period if

  • their financial results for the period are required to be comprised in group accounts, or
  • their financial results for the period would be required to be comprised in group accounts but for the application of an exemption, or
  • their financial results for the period are in fact comprised in group accounts

Group accounts means accounts prepared under s399 of the Companies Act 2006, or any corresponding provision of the law of a territory outside the United Kingdom.

Participation condition

The participation condition is met in relation to A and B (the relevant parties) on a day if, within the period of 6 months beginning with the day

  • one of the relevant parties directly or indirectly participates in the management, control or capital of the other, or
  • the same person or persons directly or indirectly participate in the management, control or capital of each of the relevant parties

The definition of participation in management, control or capital takes the same meaning as it does for transfer pricing, see INTM412060.

Investment condition

The 50% investment condition is met in relation to A and B if

  • A has a 50% investment in B, or
  • a third person has a 50% investment in each of A and B

Two persons are related on any day that they are in the same control group, or that they meet the 25% investment condition.

The 25% investment condition is met in relation to a person A and another person B if

  • A has a 25% investment in B, or
  • a third person has a 25% investment in each of A and B