Revenue Note for Guidance
This section sets out the relevant definitions and test(s) for determining associated enterprises.
(1) Definitions
“non-consolidating entity” means an entity that is (or would be) valued in consolidated financial statements –
all within the meaning of international accounting standards. Essentially the results of the entity are not included within the consolidated income statement or consolidated statement of financial position but rather the entity is valued separately on the face of the statement of financial position.
“significant influence in management of” means the ability to participate on the board of directors or equivalent governing body of the entity and in the financial and operating policy decisions of that entity, including where that power does not extend to control or joint control of that entity.
(2) Tests for associated enterprises
Enterprises shall be associated enterprises –
(a) where one enterprise directly or indirectly, possesses or is beneficially entitled to—
(b) if one enterprise, directly or indirectly, is entitled to exercise not less than 25 per cent of the voting power in the other enterprise, where that other enterprise is an entity,
(c) if one enterprise directly or indirectly, holds such rights as would—
(d) where the two enterprises are, in accordance with paragraph (a), (b) or (c), associated to a third enterprise
(e) where both enterprises are entities that are—
(f) where both enterprises—
(g) where one enterprise has significant influence in the management of the other enterprise.
(3) Where an enterprise acts together with another enterprise with respect to voting rights, share ownership rights or similar ownership rights, the enterprise shall be treated, for the purposes of the tests in (a), (b) and (c) of subsection (2), as possessing, holding or being entitled to the rights of each other.
(4) For the purposes of the tests set out in (a), (b) and (c) of subsection (2), the rights or powers of a nominee of an enterprise shall be attributed to that enterprise
(5) For the purposes of—
a reference, in subsection (1), to ‘25 per cent‘ shall be substituted by ‘50 per cent’.
(6) References to a transaction between associated enterprises includes transactions where the enterprises concerned are or were associated enterprises at the time—
Relevant Date: Finance Act 2019