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HMRC internal manual

Company Taxation Manual

Close companies: Loans to participators: release or writing-off of loan or advance while temporarily non-resident


CTM61655 explains that where a loan or advance that is assessable under CTA10/S455 is released or written off there is an income tax charge under ITTOIA05/S419 on the person to whom the loan is made.

Where the loan is released or written off while the person to whom the loan is made is temporarily non-resident ITTOIA05/S420A treats the release or write off as if it occurred in the period of return.


Company X writes off a loan to its participator, Y, on 30 September 2014 while Y was temporarily non-resident. Y returns to the UK on 30 October 2014. The loan is treated as being written off on 30 October 2014 and so the charge under ITTOIA05/S419 applies on that date.

ITTOIA05/S420A (4) ensures that the charge on return applies even where the liability could have been relieved by a double taxation relief during the period of non-residence.