Budget 2010 - Close companies denied corporation tax deduction
Many family ('close') companies making loans to their shareholders ('participators') have considered it beneficial to waive the amounts owed.
Until now, the legislation in this area has divided HMRC and many tax advisers. The lack of clarity in this area has led to companies claiming tax relief on amounts that HMRC has insisted were not tax deductible.
The Government has tried to clarify this matter and has announced that, with effect from Budget day, new legislation will deny a close company tax relief for the release or write-off of a loan to a participator.
Date: 24th March, 2010
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