What does section 271 of the Corporation Tax Act 2010 define?

Section 271 defines when two companies are treated as 'associated' for United Kingdom oil activities taxation purposes. Association arises through 51% subsidiary relationships, consortium ownership arrangements, or control relationships using the close companies definition found in sections 450 and 451 of the Corporation Tax Act 2010.

When are two companies associated as subsidiaries under CTA 2010 section 271?

Two companies are associated if one is a 51% subsidiary of the other, or if both are 51% subsidiaries of the same third company. This captures direct parent-subsidiary relationships and also situations where two sister companies share a common parent owning at least 51% of each.

How does consortium ownership create associated company status under section 271?

A company is owned by a consortium if at least 75% of its ordinary share capital is beneficially owned by companies each holding at least 5%. Those companies are consortium members. If one company is owned by such a consortium and another is a member, the two companies are treated as associated under section 271.

What definition of control applies for associated company status in oil taxation?

Control is defined by reference to the close companies rules in sections 450 and 451 of the Corporation Tax Act 2010. This broad definition examines various rights and powers, including exercising more than half the voting power, entitlement to more than half of distributable income, or entitlement to more than half of assets on winding up.

Corporation Tax Act 2010 section 271

"Associated companies"

Section 271 defines when two companies are treated as "associated" with each other for the purposes of the oil activities taxation provisions in this Part.

Two companies are associated if one is a 51% subsidiary of the other, or both are 51% subsidiaries of a third company
Association also arises where one company is owned by a consortium of which the other company is a member — a consortium exists where at least 75% of ordinary share capital is beneficially owned by companies each holding at least 5%
Companies are associated if one has control of the other, or both are under the control of the same person, using the "close companies" definition of control
The consortium ownership test used here is a simplified version of the general consortium relief rules, excluding certain additional circumstances that are not relevant to oil taxation

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