Corporation Tax Act 2009 section 408

Companies connected for section 407

Section 408 defines when two companies are treated as "connected" for the purposes of the rule in section 407, which restricts the tax treatment of debits arising from related transactions between connected companies on loan relationships.

• Two companies are connected if one controls the other, or if both are under the control of the same person or persons.
• This connection test applies at the time the relevant related transaction takes place.
• The definition of "control" follows the general meaning used elsewhere in tax legislation, covering both direct and indirect control of a company.
• The connected company test is critical because, where it is met, any debit arising from a related transaction on a loan relationship may be disallowed or restricted under section 407.