The FTA has released a Public Clarification CTP010

The FTA has released a Public Clarification CTP010 clarifying the meaning of the terms director and officer for the purpose of qualifying Connected Persons. The clarification for the first time provides a working definition of each of the terms and criteria for testing specific individuals within the organization.

In particular, the Clarification establishes:

• Test for the status of “director” – according to the position held in the management body (board of directors or equivalent). The word “director” in itself does not make a person a director; the absence of such a title also does not remove the face from the perimeter – the test for officer remains;

• Test for the status of “officer” – in essence and scope of authority. An Officer is a person with (i) authority to plan, direct and control activities (under IAS 24), (ii) authority to make strategic decisions on financial, operational or commercial matters, or (iii) authority to enter into agreements or approve actions binding on the Taxpayer. The unifying element is final/ultimate authority;

• Related Party status priority: If a person is both a Related Party and a Connected Person, only a Related Party is recognized for corporate tax purposes. This could significantly change the perimeter of disclosure used in the 2024 declaration.

• Powers of attorney, secondment, outsourcing – assessment on the merits. Depending on the scope and nature of the authority, a person may also be recognized as an officer.

Full analysis is available in our new alert.