Corporation Tax Act 2010 section 1067

Companies acting in concert or under arrangements

Section 1067 addresses the situation where two or more close companies collaborate or act under a common arrangement to channel payments or benefits to each other's participators, ensuring such payments are treated as distributions by the recipient's own company.

• Where two or more close companies each make payments to persons who are not participators in the paying company but are participators in another of those companies, and the companies are acting in concert or under arrangements, the payments are treated as if made by the company in which the recipient is a participator.
• This deemed reattribution of payments applies specifically for the purposes of sections 1064 to 1066, which deal with certain expenses of close companies being treated as distributions.
• The rule is designed to prevent close companies from circumventing the distribution rules by routing benefits through related companies rather than paying their own participators directly.
• The provision extends beyond cash payments to cover the giving of any consideration and the provision of any facilities, with the same rules applying with any necessary adaptations.