Close companies: loans to participators: by controlled companies
Section 460 brings certain loans not otherwise chargeable within CTA10/S455 and ITTOIA05/S415.
The loans affected are loans made under arrangements in which:
- a loan is made by a third party to a close company participator or associate of a participator
- the close company effectively finances the making of the loan.
Such arrangements normally involve the close company having or acquiring control of the lender. As such, the application of CTA10/S460 is limited to loans made to participators in a close company (or their associates) by a company that is, or comes to be, under the control of the close company.
You should construe CTA10/S460 as one with CTA10/S455. Any reference in Section 460 to a ‘loan’ includes an advance. Similarly, any reference to a company making a loan includes cases in which a company is, or if it were a close company would be, regarded as making a loan by virtue of CTA10/S455 (4).
The powers of information in FA08/SCH36 (CTM61505) apply to CTA10/S460 just as they do to CTA10/S455.