AS 2013: Government holds fire on close company loans

Following consultation launched at Budget 2013, the government does not intend to make any immediate changes to the structure or operation of the tax charge on loans from close companies to individuals who have a share or interest in them.

The surprise will be good news for companies, especially since earlier this year the government introduced legislation intended to close down several perceived loopholes in the rules. At the time, the government promised more rules in an effort to reform the rules to make them fairer and simpler.

The rules came to the attention of the tax avoidance industry over recent years, with many seeking to exploit perceived weaknesses in the rules. A small number of taxpayers entered into arrangements designed to circumvent the rules and enable funds to be passed from the close company to the participator without a tax charge arising.

CCH tax senior tax writer, Stephen Relf welcomed the news.

'HMRC's options for reform of the close company loans to participators rules would have had a negative impact on many of the UK's companies, particularly the smaller ones.

'HMRC are to be congratulated for firstly opening this up to consultation and secondly for listening to the responses they received,' said Relf.

Penny Sukhraj |Content editor, Accountancy - (up to 2016)

Penny Sukhraj, former content editor and writer for Accountancy and Accountancy Live, responsible for commissioning and editing news...

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