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HMRC internal manual

Enquiry Manual

HM Revenue & Customs
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Close companies: CTA10/Sections 455 and 464A (loans to and arranging conferring benefit on participators): delivering a return



FA98/SCH18/PARA 20

For APs ended before 1/7/99 the Corporation Tax Return did not include loans and advances to participators and no separate return was prescribed. Consequently there is no offence of failing to make a return of loans or advances and no incorrect return penalty. There may be a failure to notify chargeability EM8551.

S455 and S464A liabilities have to be included in a CTSA return. There is no requirement to show a loan made and wholly repaid (or a benefit conferred and return payment made) during the AP but the loan must be included if released or written off. But if a loan is still outstanding at the accounting date, but is repaid within 9 months (or a benefit conferred is outstanding but a return payment is made within 9 months), a CT600A return is still required even if there is no actual liability. The unpaid tax for tax-related late filing penalties includes unpaid S455 and S464A liability.

Where a return has already been delivered failure to return loans and advances is an incorrect return under Para 20.

Relief is given under CTA10/S458 where a loan is repaid and also on a release or write off on or after 6 April 1999 of a loan EM8560 and CTM98215. Relief is given under CTA10/S464B where a return payment is made in respect of a benefit conferred.

Liability for APs ended before 1 July 1999 is assessed separately and payment is due

  • for CTA periods 14 days after the issue of the assessment. Interest under TMA70/S88 accrues from the first day of the Financial Year following that in which the loan is made
  • for CTPF periods 14 days (or for APs ending on or after 31 March 1996, 9 months and 1 day) after the end of AP in which the loan was made.

For loans made or benefits conferred in APs ending on or after 1 July 1999, Section 455 and 464A liability forms part of the tax either self-assessed in the CTSA return or determined where a return has not been delivered.