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HMRC internal manual

Company Taxation Manual

Close companies: tests: participator - extended meaning of

CTA2010/S1069 (1) and (2) (formerly ICTA88/S418 (8)), CTA2010/S455 (5) and S459 (4) (formerly ICTA88/S419 (7))

The definition of a ‘participator’ is extended, so that a participator in a company which controls (see CTM60200 onwards) another company is to be treated as being also a participator in that other company, for the following purposes:

  • For the purposes of ICTA88/S418 (extended meaning of distributions for close companies, see CTM60500 onwards) in determining what are distributions.
  • For the purposes of CTA2010/S455 (formerly ICTA88/S419) (loans to participators, etc, see CTM61500 onwards) as respects any loan or advance.

If, for example, Company B holds all the issued share capital of Company T and Company T makes a loan to W, a shareholder in Company B, that loan is within CTA2010/S455 (formerly ICTA88/S419) since W as well as being a participator in Company B is deemed also to be a participator in Company T.