Why does HMRC ask about ‘Associated Companies’?

Since April 2023 and the introduction fo Basic and Higher Rates of Corporation Tax, HMRC has asked Ltd Companies to declare ‘Associated Companies’ on their Corporation Tax Returns.

Associated Companies are companies that are either owned by a ‘parent company’ or whose owners are the same. More complex rules also exist around commercial interdependence. The threshold at which a company is taxed at Basic Rate Corporation Tax is split between associated companies.

This rule is designed to prevent business owners of setting up multiple companies to split profits between them and thereby keep profits taxed at Basic Rate.

Associated Companies are also not allowed to claim multiple more than one Employment Allowance.