Corporation Tax Act 2010 section 18I

Association through a loan creditor

Section 18I prevents companies from being treated as associated with each other solely because of a loan creditor relationship, provided certain conditions are met.

• A company is not treated as being under the control of another company merely because the other company is its loan creditor, provided there is no other connection between them and either the creditor is not a close company or the loan arose in the ordinary course of the creditor's business.
• Where a single loan creditor controls two companies and there is no other connection between those two companies, the creditor's loan-related rights over each company are ignored when deciding whether the two companies are associated with each other.
• The same conditions apply to the common creditor scenario: the creditor must either not be a close company, or the lending relationship with each company must have arisen in the ordinary course of the creditor's business.
• A "connection" for these purposes includes any past or present dealings between the companies, and the term "loan creditor" takes its meaning from section 453 of the Corporation Tax Act 2010.

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