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A careful look at the changes to the taxation of loans to participators and other extractions of value from close companies
KEY POINTS
- Three main sets of changes in Sch 28 of the Finance Bill.
- New types of borrowers may fall within the charge.
- Status of discretionary trust beneficiaries needs clarification.
- Rules extended to loans to a partnership.
- Impact on corporate members of an LLP.
The rules on the taxation of loans to participators (now contained in CTA 2010 Part 10) are complex and often poorly understood.
The scope of these rules has now been significantly widened beyond loans to encompass other “extractions of value”. The provisions have also been extended to encompass the interaction of close companies with certain partnerships and trusts.
These changes in Sch 28 of Finance Bill 2013 amount to anti-avoidance rules layered upon anti-avoidance rules. The overall effect is that some relatively simple and...
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