Link Report

438A Extension of section 438 to loans by companies controlled by close companies.

“relevant arrangement” means any arrangement, the main purpose, or one of the main purposes, of which is to avoid or reduce a charge to tax under section 438.

(2) Subject to subsection (5), where a company which is controlled by a close company makes a loan which, apart from this section, does not give rise to a charge under subsection (1) of section 438, that section applies as if the loan had been made by the close company.

(3) Subject to subsection (5), where a company which is not controlled by a close company makes a loan which, apart from this section, does not give rise to a charge under subsection (1) of section 438 and a close company subsequently acquires control of it, that section applies as if the loan had been made by the close company immediately after the time when it acquired control.

(3A) Where a participator, or an associate of a participator, in a close company is party to any relevant arrangement, as a result of which a loan is made to a participator, or an associate of a participator, which, apart from this section, does not give rise to a charge under subsection (1) of section 438, that section shall apply as if the loan had been made by the close company to such participator, or such associate of a participator, as the case may be.

(6) Where, by virtue of this section, section 438 applies as if a loan made by one company had been made by another company, any question under that section whether—

(7) References to a company making a loan include references to cases in which the company is, or if it were a close company would be, regarded as making a loan by virtue of section 438(2).

(8) This section shall be construed together with section 438.