EM8551 - Close Companies: CTA10/Section 455 (Loans to Participators): Notifying Chargeability
TMA70/S109/(1) - CTA and CTPF
FA98/SCH 18/PARA 1 - CTSA
The charge under Section 455 only applies to close companies.
Accounting Periods ending before 1 July 1999 (CTA and CTPF)
The obligation to notify chargeability arises from TMA70/S109(1) which applies enactments applying generally to CT to liability under CTA10/S455 (previously ICTA88/S419). Thus for APs ending before 1/7/99 provisions of TMA70/S10 EM4552 provide the obligation and penalty for failure.
This was upheld by the Court of Appeal in Earlspring Properties Ltd v Guest 67TC259 confirming our view that
- as notices served under TMA70/S11 do not call for a return of loans or advances to participators, S10(1)(b) does not exempt companies who have received a Company Tax Return, and
- the obligation to notify S455 liabilities is separate to the obligation for CT and the absence of a prescribed form for returning loans or advances does not excuse the failure.
Accounting Periods ending on or after 1 July 1999 (CTSA)
Liability under CTA10/S455 (previously ICTA88/S419(1) ) is assessable and chargeable as if it were CT so this forms part of the Company Tax Return and there is no separate obligation to notify chargeability.
Specific guidance on seeking penalties for failing to notify liability under S455 and whether an offence of submitting incorrect accounts has been committed is covered at EM8630.
