Corporate debt ― frequently asked questions

Produced by a Tolley Corporation Tax expert

Corporation Tax

Guidance

The following scenarios are intended to illustrate how the various rules governing corporate debt will apply in a variety of real-world situations. The scenarios are intended to be more complex than the most simple situations but not uncommon.

For a general overview of corporate debt, including the loan relationships and derivatives regimes, see the Corporate debt ― overview guidance note.

What happens to the write off of a loan relationship by a close company to a shareholder?

When a close company makes a loan to a participator (whether or not the participator is also an employee or director), a tax charge can arise for the company.

Anti-avoidance provisions ensure that loans (and other extractions of value) made by a company to a participator via an intermediary also fall within this charge.

If such loan is subsequently waived or written off, the close company can reclaim the section 455 tax charge.

However, there is no debit for loan relationship purposes as a result of the write off, even though this may not be a connected

Continue reading the full document

To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™

TAKE A FREE TRIAL NOW

Popular Articles

Trusts and Inheritance Tax

Gifts out of surplus income

Gifts out of surplus incomeA valuable exemption from inheritance tax (IHT) applies to gifts out of surplus income. This exemption applies only to lifetime gifts and is therefore a key part of lifetime planning. The exemption applies to both outright gifts and gifts into trust. Gifts which meet the

14 Jul 2020 11:48 | Produced by Tolley in association with Emma Haley at Boodle Hatfield LLP Read more

Employment Tax

Payroll record keeping

Payroll record keepingUnder SI 2003/2682, reg 97, “...an employer must keep, for not less than 3 years after the end of the tax year to which they relate, all PAYE records which are not required to be sent to [HMRC]...”. Reasons for keeping the records include:•being able to calculate tax and

14 Jul 2020 12:52 | Produced by Tolley in association with Ian Holloway Read more

Personal Tax

Enterprise management incentive schemes

Enterprise management incentive schemesWhat is an enterprise management incentive (EMI) scheme?The enterprise management incentive (EMI) scheme is a tax-advantaged share option employee incentive scheme aimed at small entrepreneurial companies that meet certain conditions. It is designed to assist

14 Jul 2020 11:36 | Produced by Tolley Read more

UU��ֱ��

Corporate debt ― frequently asked questions

Corporate debt ― frequently asked questions