What is a 'related company' under section 976 of the Corporation Tax Act 2010?

Under section 976 of the Corporation Tax Act 2010, a related company is one that during the relevant period was in the same group as the taxpayer company (where one is a 51% subsidiary of the other or both are 51% subsidiaries of a third company), or was a member of a consortium owning the taxpayer company.

How does the group membership test work for related company status under CTA 2010 section 976?

The group membership test treats a company as related if at any time in the relevant period it was in the same group as the taxpayer company. For this test, 'same group' means either one company is a 51% subsidiary of the other, or both are 51% subsidiaries of a third company. This is a straightforward ownership threshold test.

Can a company be related indirectly through a consortium member under section 976?

Yes. A company qualifies as related if it belongs to the same group as another company that was a member of a consortium owning the taxpayer company. For this indirect route, the group definition follows the wider Part 5 group relief definition rather than the simpler 51% subsidiary test used for direct group membership.

Where are the consortium definitions used in section 976 drawn from?

Section 976 confirms that the terms 'member of a consortium' and 'owned by a consortium' take their meaning from Part 5 of the Corporation Tax Act 2010, which governs group relief. This ensures consistency across the Act's provisions dealing with consortium relationships and related company determinations under United Kingdom corporation tax law.

Corporation Tax Act 2010 section 976

Meaning of "related company"

Section 976 defines what counts as a "related company" for the purposes of the rules in this Chapter, by reference to group membership and consortium ownership relationships with the taxpayer company.

A company is "related" if, at any time in the relevant period, it was in the same group as the taxpayer company, meaning one is a 51% subsidiary of the other or both are 51% subsidiaries of a third company.
A company is also "related" if it was a member of a consortium that owned the taxpayer company during the relevant period.
A company is "related" if it belonged to the same group (using the wider Part 5 group relief definition) as another company that was itself a member of a consortium owning the taxpayer company.
The meanings of "member of a consortium" and "owned by a consortium" follow the definitions used in Part 5 of the Corporation Tax Act 2010 (group relief).

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