Corporation Tax Bill

House of Commons

Session 2009 - 10
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Other Bills before Parliament

Corporation Tax Bill

Corporation Tax Bill
Part 10 — Close companies
Chapter 3 — Charge to tax in case of loan to participator
232

Loan treated as made to participator
459
Loan treated as made to participator
(1)
This section applies if under arrangements made by a person (P)—
(a)
a close company makes a loan or advance which, apart from this
section, does not give rise to a charge to tax under section 455, and
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(b)
a person other than the close company makes a payment or transfers
property to, or releases or satisfies (in whole or in part) a liability of, a
relevant person who is a participator in the company or an associate of
such a participator.
(2)
Sections 455 to 458 apply as if the loan or advance had been made to the
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relevant person.
(3)
But this section does not apply if—
(a)
the arrangements mentioned in subsection (1) are made by P in the
ordinary course of a business carried on by P, or
(b)
the total income of the relevant person includes, in respect of the matter
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mentioned in subsection (1)(b), an amount not less than the loan or
advance.
(4)
If a company (C) controls another company (D), a participator in C is to be
treated for the purposes of this section as being also a participator in D.
Loan treated as made by close company
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460
Loan treated as made by close company
(1)
This section applies if a company (C) which is controlled by another company
makes a loan or advance which, apart from this section, does not give rise to a
charge to tax under section 455.
(2)
If C is controlled by a close company at the time the loan or advance is made,
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sections 455 to 459 apply as if the loan or advance had been made by the close
company.
(3)
If C is not controlled by a close company at that time but a close company
subsequently acquires control of it, sections 455 to 459 apply as if the loan or
advance had been made by the close company immediately after the time
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when it acquired control.
(4)
If two or more close companies together control C or together acquire control
of C, subsection (2) or (as the case may be) subsection (3) is to have effect—
(a)
as if each of them controlled C, and
(b)
as if the loan or advance had been made by each of those close
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companies.

But the loan or advance is to be apportioned between those close companies in
such proportion as may be appropriate having regard to the nature and
amount of their respective interests in C.
(5)
For an exception to this section, see section 461.
40
(6)
See also section 462 (determination of particular questions as a result of this
section).

Corporation Tax Bill
Part 10 — Close companies
Chapter 3 — Charge to tax in case of loan to participator
233

(7)
References in this section and sections 461 and 462 to a company making a loan
include references to cases in which the company is, or if it were a close
company would be, regarded as making a loan because of section 455(4).
461
Exception to section 460
(1)
Section 460 does not apply if it is shown that no person has made any
5
arrangements (otherwise than in the ordinary course of a business carried on
by the person) as a result of which there is a connection—
(a)
between—
(i)
the making of the loan or advance, and
(ii)
the acquisition of control, or
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(b)
between—
(i)
the making of the loan or advance, and
(ii)
the provision by the close company of funds for C.
(2)
The close company is to be treated for the purposes of subsection (1) as
providing funds for C if it directly or indirectly makes a payment or transfers
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property to, or releases or satisfies (in whole or in part) a liability of, C.
462
Determination of particular questions as a result of section 460
(1)
This section applies if, as a result of section 460, sections 455 to 459 have effect
as if a loan or advance made by C had been made by another company.
(2)
Any question under those sections whether—
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(a)
the company making the loan or advance did so in the ordinary course
of a business carried on by it which includes the lending of money,
(b)
the loan or advance or part of it has been repaid to the company, or
(c)
the company has released or written off the whole or part of the debt in
respect of the loan or advance,
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is to be determined by reference to C.
Taxation of debtor on release of loan to trustees of settlement which has ended
463
Taxation of debtor on release of loan to trustees of settlement which has
ended
(1)
This section applies if each of conditions A to D is met.
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(2)
Condition A is that a company (X) is or was chargeable to tax under section 455
(charge to tax in the case of loan to participator) in respect of a loan or advance
made to the trustees of a settlement.
(3)
Condition B is that X releases or writes off the whole or part of the debt in
respect of the loan or advance.
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(4)
Condition C is that the person from which the debt was due at the time of the
release or writing off is a company (Y).
(5)
Condition D is that the release or writing off takes place after the settlement has
ended.
(6)
When the release or writing off takes place, Y is treated as receiving an amount
40
to which the charge to corporation tax on income applies.

Corporation Tax Bill
Part 10 — Close companies
Chapter 4 — Power to obtain information
234

(7)
The amount which Y is treated as receiving is equal to—


where—

N is the amount released or written off, and

R is a percentage rate equal to the dividend ordinary rate specified in section
8(1) of ITA 2007 for the tax year in which the release or writing off takes place.
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464
Section 463: other person treated as releasing or writing off debt
(1)
This section applies if sections 455 to 459 have effect under section 460 (loan
treated as made by close company) as if a loan or advance had been made by a
company (“A”), rather than the company (“B”) which—
(a)
actually made it,
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(b)
is regarded as having made it under section 455(4) (deemed loan where
debt incurred or assigned to close company), or
(c)
would be so regarded if it were a close company.
(2)
If the whole or part of the debt is released or written off by B, A rather than B
is treated, for the purposes of section 463, as releasing it or writing it off.
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Chapter 4
Power to obtain information
465
Power to obtain information
(1)
An officer of Revenue and Customs may, for the purposes of Chapter 3, by
notice require any person in whose name any shares or loan capital are
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registered—
(a)
to state whether or not that person is the beneficial owner of the shares
or loan capital, and
(b)
if that person is not the beneficial owner of the shares or loan capital, to
provide the name and address of the person on whose behalf the shares
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or loan capital are registered in that person’s name.
(2)
Subsections (3) and (4) apply if a company (“the issuing company”) appears to
an officer of Revenue and Customs to be a close company.
(3)
The officer may, for the purposes of Chapter 3, by notice require the issuing
company to provide the officer with—
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(a)
particulars of any bearer securities issued by the company,
(b)
the names and addresses of the persons to whom the securities were
issued, and
(c)
details of the amounts issued to each person.
(4)
The officer may, for the purposes of Chapter 3, by notice require—
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(a)
any person to whom bearer securities were issued by the company, or

Corporation Tax Bill
Part 11 — Charitable companies etc
Chapter 1 — Introduction
235

(b)
any person to or through whom bearer securities issued by the
company were subsequently sold or transferred,

to provide any further information that the officer reasonably requires with a
view to enabling the officer to find out the names and addresses of the persons
beneficially interested in the securities.
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(5)
In this section “securities” includes—
(a)
shares, stocks, bonds, debentures and debenture stock, and
(b)
any promissory note or other instrument evidencing indebtedness to a
loan creditor of the company.
Part 11
10
Charitable companies etc
Chapter 1
Introduction
466
Overview of Part
(1)
This Part makes provision about some gifts and payments made to charitable
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companies, including provision applying the charge to corporation tax on
income and conferring exemptions (see sections 471 to 474).
(2)
This Part also provides for some of the income of charitable companies and
others to be exempt from corporation tax (see sections 475 to 477 and Chapter
3).
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(3)
In the case of a charitable company which has a non-exempt amount for an
accounting period (see section 493), the exemptions under this Part are subject
to restrictions (see section 492).
(4)
The non-exempt amount for an accounting period depends on the charitable
company’s attributable income and gains for the period and its non-charitable
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expenditure for the period (see sections 493 and 496 to 517).
(5)
See also Schedule 19 to FA 2008, which contains provision for transitional
payments to charitable companies and certain other bodies in respect of gifts
made in the tax years 2008-09 to 2010-11.
467
Meaning of “charitable company”
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In this Part “charitable company” means a body of persons established for
charitable purposes only.
468
Meaning of “eligible body”
Each of the following is an eligible body for the purposes of this Part—
(a)
the Trustees of the National Heritage Memorial Fund,
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(b)
the Historic Buildings and Monuments Commission for England,
(c)
the Trustees of the British Museum,
(d)
the Trustees of the Natural History Museum, and
(e)
the National Endowment for Science, Technology and the Arts.