Corporation Tax Act 2009 section 348

Introduction: meaning of "connected companies relationship"

Section 348 defines what constitutes a "connected companies relationship" for the purposes of the loan relationships rules, covering both debtor and creditor positions including indirect connections through chains of loans.

• A debtor relationship is a connected companies relationship where the borrowing company is connected to the company (or chain of companies) acting as creditor
• A creditor relationship is a connected companies relationship where the lending company is connected to the company (or chain of companies) acting as debtor
• Indirect positions count — a company is treated as a creditor or debtor even if it reaches that position through a series of loan relationships or money debts
• If a loan relationship qualifies as a connected companies relationship at any point during an accounting period, it is treated as a connected companies relationship for the whole of that period