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HMRC internal manual

Company Taxation Manual

HM Revenue & Customs
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Close companies: loans to participators: companies controlled by a close company


Section 460 makes sure that a loan made by a company (whether a close company or not) which is controlled by a close company, is chargeable under CTA10/S455. It does not operate where CTA10/S461 applies (see CTM61740).

A loan by a company controlled by a close company to a participator in the controlling company is normally chargeable directly under CTA10/S455 (1). This will be the case if the lending company is close because the definition of ‘participator’ in CTA10/S455 (5) includes participators in the controlling company.

Section 455, however, does not by itself charge a loan made by a company which is not close (for example because it is non-resident).

So, for example, a non-resident subsidiary company may be set up or acquired and loans made to participators in the parent company. A loan out of money subscribed for share capital or out of existing funds of that subsidiary to a participator of the close company is brought within Section 455 by Section 460.