EIM47201 - Pt 7A ITEPA 2003: Close Company Gateway (CCG): introduction

Pt 7A ITEPA 2003 Section 554AA

Section 554AA details the provisions of the close company gateway (CCG). The schemes which these provisions are designed to counter involve share-holding employees or directors of companies who decide to extract funds from their companies via a third party. The company has to pass value in specified ways to a third party and a relevant step has to then be taken. For a charge to tax to exist, the following criteria need to be satisfied:

• there has to be a relevant arrangement which wholly or partly covers or relates to an employee (“A”) – EIM47205
• it is reasonable to suppose that the arrangement is wholly or partly concerned with providing what are known as A-linked payments, benefits or loans – EIM47210
• a close company (“B”) has to enter into a relevant transaction – EIM47215
• it must be reasonable to suppose that the relevant transaction is entered into in pursuance of the relevant arrangement mentioned above or there has to be a connection between the two – EIM47220
• at the time B enters into the relevant transaction or at any time in the 3 year period leading up to the date of the relevant transaction, A is a director or employee of B – see EIM47225
• for the same dates and period, A must at some time have held a material interest in B – see EIM47225
• a relevant step is taken by a relevant third person – EIM47235
• it must be reasonable to suppose that the sum of money or asset which is the subject of the relevant step represents or has arisen or been derived from the sum of money or asset which was the subject of the relevant transaction or vice versa – EIM47235
• at some time between or around the times of the associated relevant transactions and relevant steps, a main purpose of the relevant arrangement has to be the avoidance of income tax, NIC, corporation tax or a charge to tax under section 455 CTA 2009

The concepts described above are more fully detailed in the following paragraphs.