What is a related party transaction in accounting?
Answered 17 March 2026
Your question — "What is a related party transaction in accounting?" — is a general accounting/financial reporting question (e.g. under IAS 24 or FRS 102). This falls outside the scope of UK tax law and HMRC guidance, which is the exclusive basis on which I can provide answers.
The sources available to me cover the tax law meaning of "related party" (primarily for corporation tax purposes under CTA 2009), not the broader accounting standards definition. Here is what the available sources do say:
What the law says (UK Tax — CTA 2009)
For corporation tax purposes (specifically the intangible fixed assets regime in Part 8 CTA 2009), a person ("A") is a "related party" in relation to a company ("B") in the following circumstances:
- Where A is a company: A has control of, or holds a major interest in, B, or B has control of, or holds a major interest in, A;
- A and B are both under the control of the same person (subject to exceptions for Crown bodies, foreign sovereign powers, etc.);
- B is a close company and A is, or is an associate of, a participator in B;
- A and B are in the same group.
A is also treated as a related party if they would be so but for any person (other than an individual) being subject to insolvency arrangements.
HMRC guidance / practice
HMRC confirms that a transfer of an intangible asset between two companies controlled by the same individual constitutes a "related party transaction" under s835(3) CTA 2009 — and this remains the case even where one company is in liquidation, by virtue of s835(7).
⚠️ Important limitation: The sources available to me define "related party" only for specific UK tax purposes (CTA 2009 Part 8). The general accounting definition of a related party transaction — as used in financial reporting standards such as IAS 24 (Related Party Disclosures) or FRS 102 Section 33 — is not covered in the available materials. For that definition, you should consult the relevant accounting standard directly (IAS 24 or FRS 102), or the Financial Reporting Council (FRC).
Citation sources
CTA09/PART8/S835 (7)-(9) modifies the definition of “related party” with effect from 12 March 2008. The purpose of this paragraph is to ensure that the identification of “related parties” is unaffected by situations where any person (other than an individual) is the subject of “insolvency arrangements”, or equivalent arrangements. For example, company A Ltd is controlled by Mr X. A Ltd is subject to “insolvency arrangements” and a Liquidator is appointed who has “control” of the company’s affair
Part 8 Intangible fixed assets Chapter 12 Related parties Meaning of “related party”, “control” and “major interest” “Related party” 835 1 This section explains when a person (“A”) is a “ related party ” in relation to a company (“B”) for the purposes of this Part. 2 In a case where A is a company, A is a related party in relation to B if— a A has control of, or holds a major interest in, B, or b B has control of, or holds a major interest in, A. 3 In a case where A is a company, A is a related