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HMRC internal manual

Enquiry Manual

Close companies: CTA10/Sections 455 and 464A (loans to and arrangements conferring benefit on participators): notifying chargeability

TMA70/S109/(1) - CTA and CTPF


The charges under Sections 455 and 464A of Corporation Tax Act 2010 only apply to close companies. For accounting periods ending before 1 April 2010, the charge was under Section 419 Income and Corporation Taxes Act 1988.

Note that if the loan is repaid or released, or a return payment is made in respect of a benefit conferred during an accounting period ending

  • on or before 31 March 2010, then the relief is due under ICT88/S419(4)
  • on or after 1 April 2010, then the relief is due under CTA10/S458 or CTA10/S464B.

Accounting Periods ending before 1 July 1999 (CTA and CTPF)

The obligation to notify chargeability arises from TMA70/S109(1) which applies enactments applying generally to CT to liability under CTA10/S455 (previously ICTA88/S419). Thus for APs ending before 1/7/99 provisions of TMA70/S10 EM4552 provide the obligation and penalty for failure.

This was upheld by the Court of Appeal in Earlspring Properties Ltd v Guest 67TC259 confirming our view that

  • as notices served under TMA70/S11 do not call for a return of loans or advances to participators, S10(1)(b) does not exempt companies who have received a Company Tax Return, and
  • the obligation to notify S455 liabilities is separate to the obligation for CT and the absence of a prescribed form for returning loans or advances does not excuse the failure.

Accounting Periods ending on or after 1 July 1999 (CTSA)

Liability under CTA10/S455 (previously ICTA88/S419(1) ) or 464A is assessable and chargeable as if it were CT so this forms part of the Company Tax Return and there is no separate obligation to notify chargeability.

Specific guidance on seeking penalties for failing to notify liability under S455 and S464A and whether an offence of submitting incorrect accounts has been committed is covered at EM8630.