Readers’ forum: Are companies owned by a mum and daughter associated?

I act on behalf of a mother (A) and daughter (B) who each carry out work through their own personal service companies X Ltd and Y Ltd respectively. B carries out work for various clients through Y Ltd which is managed by A who is paid for this through X Ltd. The net taxable profits of both companies have been about £20 000 a year.

B owns all of the shares in her company Y Ltd while A owns 50% of the shares in X Ltd with the other 50% being owned by her boyfriend (C). Other than possible IR35 implications – on which I would appreciate comments – this seemed historically a straightforward situation. My main concern now is the twin rates of 19% and 25%.

The cause of worry is that C also carries on business through X Ltd and has recently secured a...