Autumn 2007 Newsletter Contents Borrowed clothes? You want it when? The daily grind Knock knock Computers@home Stick to the facts It's personal Expense claims Cash down Plant buying Hobson's choice A helping hand Education, education Up with the Joneses Bills bills bills Done to a crisp Tax association

Tax association If you are a small company, you pay tax at a lower rate - currently 20% rather than 30% - on the first £300,000 of profits. If you have "associated companies", that limit is divided up - so if you are one of a group of 10, each of them will only enjoy the lower rate on £30,000. The problem is that it's not always obvious when this applies. Two companies are associated if they are under "common control", even if the controller isn't a company. Close family relations can be added together in determining control, and so can business partners. So if Smith and Jones are in partnership together, Smith's company and Jones' company might each pay more corporation tax - even if they had nothing else to do with each other. Sometimes it's not obvious that this rule applies. Suppose Smith owns 60% of company X: it does not occur to the directors of that company that their corporation tax is affected by the other companies controlled by Smith's wife and Smith's business partners. It's only later, when the Inspector asks questions, that the problem becomes apparent. If they knew at the time, they might be able to do something about it - but later may be too late. If you have other companies, or partners or relatives with other companies, please let us know so we can think about the rules. They may not apply, but it's better to be safe than sorry.