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Summary of tax considerations

The concept of a Close company is intended to capture those companies that are closely controlled (ie by the owners and managers) and therefore could be used to manipulate the tax position of its activities and its Investors.

If a company is a close company, its own tax position may be affected by:

1. •

   the tax charge made on Loans advanced and other benefits made available to participators, and

2. •

   the extended meaning of distributions

These tax consequences are further explained in this Practice Note.

The tax position of a close company's participators may also be affected by:

1. •

   the extended meaning of distributions

2. •

   the income tax change that arises where a close company has been chargeable to tax under section 455 of the Corporation Tax Act 2010 (CTA 2010) and releases or writes off the whole or part of the debt

3. •

   the Attribution of a transfer of an asset by a close company at an undervalue

4. •

   the attribution of payments to and from the company where the company has been interposed