Taxation (International and Other Provisions) Act 2010 section 159

Indirect participation: potential direct participant

Section 159 sets out when a person is treated as indirectly participating in the management, control or capital of another person, by looking beyond that person's own direct rights and powers to include future rights, rights held by connected persons, and rights exercisable on their behalf by others.

• A person ("P") is an indirect participant in another person ("A") if P would be a direct participant were P credited with certain additional rights and powers beyond those already attributed to P under the direct participation rules.
• The additional rights and powers include those P is entitled to acquire in the future, those held by other persons that must be exercised on behalf of, under the direction of, or for the benefit of P, and those held by persons connected with P.
• Rights attached purely to loan security — that is, rights over a borrower's property granted solely under the terms of security for a loan — are excluded from the attribution of third-party rights exercisable on behalf of, under the direction of, or for the benefit of P.
• The connected persons rule operates through chains: if a connected person of P would themselves be treated as an indirect participant through their own connected persons, all of those rights and powers are also attributed to P.