Treasury consultation on Associated Companies rules

HMRC and The Treasury have announced a consultation on reform of the Corporation Tax rules for associated companies.

In doing so, they state that they wish to discover whether the option presented in the consultation document would benefit business, by use of a more targeted definition. Reference is made to a "fragmentation test" and the option presented does appear to raise the possibility of a move away from companies treated as associated, by being under the control of related individuals, despite the respective businesses not being inter-connected in any way.

This would be a welcome relaxation of an aspect of the legislation that causes anguish for practioners and business owners alike.

Given that this is an area with repercussions for practioners advising owners of small companies, participation in the consultation is to be encouraged. The Treasury announcement and consultation document can be viewed at:

http://www.hm-treasury.gov.uk/consult_simplification_review.htm