Finance Act 2018

Double taxation

3 (1) In section 554Z2 of ITEPA 2003 (value of relevant step to count as employment income), after subsection (1) insert—

“(1AA) But subsection (1) is subject to section 554Z2A (close companies).”

(2) After section 554Z2 of ITEPA 2003, insert—

“554Z2A Exception to section 554Z2(1): close companies

(1) Section 554Z2(1) does not apply in the case of a relevant step if—

(a) this Chapter applies in the case of the relevant step only by reason of section 554AA (close companies),

(b) the relevant step is a step within section 554B, 554C or 554D,

(c) the relevant step gives rise to a charge to tax under either—

(i) section 455 of CTA 2010 by virtue of section 459 of that Act (loans treated as made to participator), or

(ii) section 415 of ITTOIA 2005 (release of loan to participator in a close company), and

(d) in a case within paragraph (c)(i), either the payment condition or the consent condition is met in relation to the charge under section 455 of CTA 2010.

(2) The payment condition is met in relation to a charge to tax under section 455 of CTA 2010 if—

(a) the net section 455 charge is paid in full on or before the due date, or

(b) the net section 455 charge is nil.

(3) The “net section 455 charge” means the amount of the charge to tax under section 455 of CTA 2010 less the amount of section 458 relief from that charge.

(4) In subsection (3) “section 458 relief” means relief given under section 458 of that Act—

(a) in respect of a repayment made, or a release or writing-off occurring, on or before the due date, and

(b) on a claim made on or before the due date.

(5) The consent condition is met in relation to a charge to tax under section 455 of CTA 2010 if—

(a) the charge to tax is reported, in a company tax return of B’s, as required under Schedule 18 to FA 1998 (company tax returns etc),

(b) the payment condition is not met in relation to that charge, and

(c) an officer of Revenue and Customs considers that section 554Z2(1) should not apply in the case of the relevant step concerned.

(6) In this section, references to the “due date” in relation to a charge to tax under section 455 of CTA 2010 are references to the day on which the tax is due and payable (see section 455(3) of CTA 2010).”