Finance Bill

House of Commons

Session 2013 - 14
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Finance Bill

Finance Bill
Schedule 28 — Close companies
Part 1 — Amendments of Part 10 of CTA 2010
379

6     (1)
After Chapter 3A insert—
“Chapter 3B
Repayments and return payments
464C
Treatment of certain repayments and return payments
(1)
Where—
5
(a)
within any period of 30 days—
(i)
the qualifying amount of repayments made to a close
company in respect of one or more chargeable
payments made by the company to a person totals
£5,000 or more, and
10
(ii)
the available amount of the relevant chargeable
payments made by the company to the person or an
associate of the person totals £5,000 or more, and
(b)
the relevant chargeable payments are made in an accounting
period subsequent to that in which the chargeable payments
15
mentioned in paragraph (a)(i) were made,

the qualifying amount of the repayments, so far as not exceeding the
available amount of the relevant chargeable payments, is to be
treated for the purposes of this Chapter as a repayment of the
relevant chargeable payments.
20
(2)
A chargeable payment is a relevant chargeable payment for the
purposes of subsection (1) if (or to the extent that) it is not repaid
within the period of 30 days mentioned in that subsection.
(3)
Where—
(a)
immediately before a repayment is made in respect of one or
25
more chargeable payments made by a close company to a
person, the total amount owed to the company by the person
in respect of chargeable payments is £15,000 or more,
(b)
at the time the repayment is made, arrangements had been
made for one or more chargeable payments to be made to
30
replace some or all of the amount repaid, and
(c)
the available amount of the chargeable payments made by
the company to the person or an associate of the person
under the arrangements totals £5,000 or more,

the qualifying amount of the repayment, so far as not exceeding the
35
available amount of the chargeable payments mentioned in
paragraph (c), is to be treated for the purposes of this Chapter as a
repayment of those chargeable payments.
(4)
An amount contained in a charg eable payment is an available
amount—
40
(a)
for the purposes of subsection (1), to the extent that no
repayment has been treated as made in respect of it by the
previous operation of that subsection, and
(b)
for the purposes of subsection (3), to the extent that no
repayment has been treated as made in respect of it—
45
(i)
by the operation of subsection (1), or
(ii)
by the previous operation of subsection (3).

Finance Bill
Schedule 28 — Close companies
Part 2 — Other amendments
380

(5)
An amount contained in a repayment is a qualifying amount to the
extent that it has not been treated by the previous operation of this
section as a repayment of a chargeable payment.
(6)
This section does not apply in relation to a repayment which gives
rise to a charge to income tax on the participator or associate by
5
reference to whom the loan, advance or benefit was a chargeable
payment.
(7)
The Treasury may by order vary a sum specified in subsection (1) or
(3).
(8)
An order under subsection (7) may contain incidental, supplemental,
10
consequential and transitional provision and savings.
464D
Section 464C: supplementary
(1)
All such assessments and adjustments of assessments are to be made
as are necessary to give effect to section 464C(1) and (3).
(2)
If a person who has made a tax return becomes aware that, after
15
making it, anything in it has become incorrect because of the
operation of section 464C(1) or (3), the person must give notice to an
officer of Revenue and Customs specifying how the return needs to
be amended.
(3)
The notice must be given within 3 months beginning with the day on
20
which the person became aware that anything in the return had
become incorrect because of the operation of section 464C(1) or (3).
(4)
In section 464C, “chargeable payment” means—
(a)
a loan or advance made by a close company which gives rise
to a charge to tax under section 455, or
25
(b)
the conferral of a benefit on an individual in circumstances
which give rise to a charge to tax under section 464A.
(5)
In a case within subsection (4)(b)—
(a)
the conferral of the benefit is to be treated for the purposes of
section 464C as a loan made by the close company to the
30
individual to the value of the benefit conferred, and
(b)
any payment in respect of which (apart from section 464C)
relief is due to the close company under section 464B is to be
treated for the purposes of section 464C as a repayment of the
loan.”
35
      (2)
The amendment made by this paragraph has effect in relation to repayments
and return payments made on or after 20 March 2013.
7
In section 465 (power to obtain information), after “Chapter 3” (in both
places) insert “or 3A”.
Part 2
40
Other amendments
Taxes Management Act 1970
8
TMA 1970 is amended as follows.

Finance Bill
Schedule 28 — Close companies
Part 2 — Other amendments
381

9
In section 59E(11)(a) (provision as to when tax is due and payable)—
(a)
after “455” insert “or 464A”, and
(b)
after “loan” insert “or benefit”.
10
In section 59F(6)(a) (arrangements for paying tax on behalf of group
members)—
5
(a)
after “455” insert “or 464A”, and
(b)
after “loan” insert “or benefit”.
11    (1)
Section 109 (corporation tax on close company in connection with loans to
participators etc) is amended as follows.
      (2)
In subsection (1)—
10
(a)
after “459” insert “and 464A and 464B”, and
(b)
for “by close companies” insert “or benefits”.
      (3)
For subsection (3) substitute—
“(3)
For the purposes of section 87A of this Act as applied by subsection
(1) above—
15
(a)
the date when tax under section 455 of CTA 2010 became due
and payable is that determined in accordance with
subsection (3) of that section, and
(b)
the date when tax under section 464A of CTA 2010 became
due and payable is that determined in accordance with
20
subsection (4) of that section.”
      (4)
After subsection (3A) insert—
“(3B)
If there is a payment which for the purposes of section 464B of CTA
2010 is a return payment in respect of a benefit conferred, interest
under section 87A of this Act on so much of the tax under section
25
464A of CTA 2010 as is referable to the return payment is not payable
in respect of any period after the date on which the return payment
was made.”
      (5)
In subsection (4), after “458” insert “or 464B”.
      (6)
In subsection (5), after “459” insert “or 464A and 464B”.
30
      (7)
In the heading, after “loans” insert “or benefits”.
12
The amendments made by paragraphs 9 to 11 are treated as having come
into force on 20 March 2013.
Finance Act 1998
13    (1)
Schedule 18 to FA 1998 (company tax returns, assessments and related
35
matters) is amended as follows.
      (2)
In paragraph 1 (meaning of “tax”), after the entry relating to section 455 of
CTA 2010 insert—
“section 464A of that Act (tax on other benefit conferred on
participator),”.
40
      (3)
In paragraph 8(1) (calculation of tax payable), in paragraph 1 of the third
step—
(a)
after “455” insert “or 464A”, and

Finance Bill
Schedule 28 — Close companies
Part 2 — Other amendments
382

(b)
for “or advance made by close company” substitute “, advance or
benefit”.
      (4)
In paragraph 18 (failure to deliver return: tax-related penalty), for sub-
paragraph (4) substitute—
    “(4)
In determining that amount no account is to be taken of—
5
(a)
any relief under section 458 of the Corporation Tax Act
2010 (relief in respect of repayment, etc of loan) which is
deferred under subsection (5) of that section, or
(b)
any relief under section 464B of that Act (relief in respect of
return payment) which is deferred under subsection (5) of
10
that section.”
      (5)
The amendments made by this paragraph are treated as having come into
force on 20 March 2013.
Income Tax (Trading and Other Income) Act 2005
14    (1)
In section 417 of ITTOIA 2005 (person liable for charge on release of loan or
15
advance), for subsection (1) substitute—
“(1)
The person liable for any tax charged under this Chapter is—
(a)
in the case of a loan or advance made to a partnership, any
partner who is an individual, and
(b)
in any other case, the person to whom the loan or advance
20
was made.
(1A)
If more than one person is liable in a case within subsection (1)(a), the
liability is to be apportioned between them in a just and reasonable
manner.”
      (2)
The amendment made by this paragraph has effect in relation to loans or
25
advances made on or after 20 March 2013.