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HMRC internal manual

Company Taxation Manual

HM Revenue & Customs
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Close companies: loans to participators: arrangements not caught


The exclusions from CTA10/S460 (1) and CTA10/S460 (3) (CTM61700 and CTM61710) are described here.

These sub-sections will not apply if it is shown that no person has made any arrangements which results in a connection:

  • between the making of the loan and the acquisition of control, or
  • between the making of the loan and the provision by the close company of funds for the company making the loan

In this regard, the close company is providing funds if it directly or indirectly:

  • makes any payment to
  • transfers any property to
  • releases or satisfies (in whole or in part) a liability of

the company making the loan.

The intention is to limit the application of these provisions to cases in which a loan by the controlled company is clearly related to an application of the controlling company’s own funds.


A loan is made by a commercial non-resident trading subsidiary out of its own profits to, say, a participator of the parent company. These profits have accumulated since it became a subsidiary of the controlling company.

CTA10/S455 (as extended by Section 460) should not apply in this case unless a connection can be shown between the making of the loan and the provision of funds to the subsidiary by the close company.