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MARK McLAUGHLIN looks at the new anti-avoidance rule on the release or write-off of loans by close companies to participators
KEY POINTS
- Close companies are prevented from obtaining a deduction for loans to participators.
- Why might a loan write-off have been better than a dividend payment?
- Are distributable reserves needed to make a write-off?
- What is the National Insurance position?
- Watch out for treatment as disguised earnings.
Here is a question for those Taxation readers young enough to remember their school days. Did you ever have the misfortune of playing with the kid who had to win games at all costs?
You know the one who insisted on making up the rules as they went along. And when they failed to win with one set of rules they would change them and perhaps change them back again until eventually the game was won?
The provision introduced in FA...
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