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HMRC internal manual

Enquiry Manual

Close companies: CTA10/Sections 455 and 464A (loans to and arranging conferring benefit on participators): claims to relief for CTSA periods

CTA10/S455

CTA10/S464A

CTA10/S458

CTA10/S464B

FA98/SCH18/PARA 57

FA98/SCH18/PARA 58

Where the whole or part of a loan or advance is repaid, released or written off, the company is entitled to relief under CTA10/S458 from the amount chargeable under CTA10/S455 or a proportionate part of it on a claim. Relief is similarly available under CTA10/S464B where a return payment is made in respect of all or part of a benefit conferred. If repayment etc of the loan or a return payment in respect of a benefit conferred is made more than nine months after the end of the accounting period in which the loan etc was made, then the relief due is deferred until the due date for the accounting period in which the repayment etc. takes place CTM61610.

Note that if a loan is repaid or released during an accounting period ending

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

CTA10/S458 claims are unusual in that both Paras 57 and 58 of FA98/SCH18 and CTA10/S458(6) fall to be considered CTM98215 (similarly S464B). CTA10/S458(6) and CTA10/S464B(6) determines whether effect is to be given to the claim in the company’s return and self assessment or by discharge or repayment under TMA70/Sch 1A.

Section 458(6) and section 464B(6) provides that TMA70/Sch 1A applies to claims under S458 unless:

  • the loan is made during the return period
  • the claim is included in the return (by amendment or otherwise), and
  • relief is due when the claim was made.

If all of the above three conditions apply, the company may give effect to the claim in its return and self assessment CTM98220.

Where the claim affects only one accounting period (for example, a loan made in AP1 is fully repaid in AP2) both FA98/Sch18/Paras 57 and 58 apply and such claims must be made in a return or amended return wherever possible. The claim cannot be made before the return for the year in which the loan was made is delivered.

When the conditions in CTA10/S458(6) or CTA10/S464B(6) are satisfied so that effect to the relief can be given in the company’s return and self assessment any enquiry about the claim would be into the return or amended return: otherwise any enquiry would be under the TMA70/Sch 1A rules into the claim.

Where the claim affects more than one accounting period (for example, loans made in AP1 and AP2 are fully repaid in AP3 and the claim covers relief for APs 1 and 2) FA98/Sch18/Para 58 applies. The conditions in CTA10/S458(6) and CTA10/S464B(6) will not usually be satisfied so TMA70/Sch 1A will apply to the claim and any enquiry will be into the claim rather than the return.

Where a single repayment covers loans made and benefits conferred in more than one year, the company may make separate claims for different loan years, so that effect can be given to one (or more) claims by amending a recent return and the remaining claim(s) dealt with under TMA70/Sch 1A. This is acceptable, and each claim should be handled separately in accordance with the relevant part of the above guidance. Where this happens, and you decide to open an enquiry, you will have to enquire into each claim separately.