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Finance Act 2018

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Double taxation

4(1)Schedule 11 to F(No.2)A 2017 (employment income provided through third parties: loans etc outstanding on 5 April 2019) is amended as follows.

(2)Before paragraph 37 (but after the italic heading preceding that paragraph) insert—

36A(1)Sub-paragraphs (2) to (8) apply if—

(a)a person (“P”) would, apart from this paragraph, be treated as taking a relevant step by paragraph 1 by reason of a loan made to a relevant person, and

(b)the loan gives rise to a charge to tax under section 455 of CTA 2010 by virtue of section 459 of that Act (loans treated as made to participators).

(2)In this paragraph “the key date” means the later of—

(a)5 April 2019, and

(b)the day on which the tax referred to in sub-paragraph (1)(b) is due and payable (see section 455(3) of CTA 2010).

(3)Paragraph 1(2) has effect as if it treated P as taking the relevant step immediately before the end of the key date, but this is subject to sub-paragraphs (4) and (5).

(4)Paragraph 1(1) does not apply in the case of the loan if the payment condition is met.

(5)Paragraph 1(1) does not apply in the case of the loan if—

(a)the payment condition is not met,

(b)the charge to tax mentioned in sub-paragraph (1)(b) is reported, in a company tax return of B’s, as required under Schedule 18 to FA 1998 (company tax returns etc), and

(c)an officer of Revenue and Customs considers that paragraph 1(1) should not apply in the case of the loan.

(6)The payment condition is met if—

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

(b)the net section 455 charge is nil.

(7)The “net section 455 charge” is the amount of the tax referred to sub-paragraph (1)(b) less the amount of section 458 relief from that tax.

(8)In sub-paragraph (7) “section 458 relief” means relief given under section 458 of CTA 2010—

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

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

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