Such claims arise in respect of transfers by close companies or
alterations in their share/loan capital or the rights attaching to
them. Ss.94 - 102 IHTA 1984 lift the corporate veil and attribute
to the participators in a close company a transfer of value made by
the company and treat alterations in capital or rights as if they
are dispositions made by the participators.
Any case in which ss.94-102 may be in point should be
referred to your TeamLeader who will consult the appropriate
specialist.
The following aims to help identify some of the ingredients
of this legislation and the situations which may arise.
Close Company
To be caught by this legislation the company must be a close
company as defined in s.102(1). Dymond's Capital Taxes at Chapter
22 is helpful in explaining the meaning of "close company" for this
purpose. The definition of close company is complex but, in very
general terms, a close company is one that is under the control of
five or fewer participators or of participators who are directors.
Additionally, a company is also a close company if, on a notional
winding-up, five or fewer participators would be entitled to
receive more than half of any distributions. Though its precise
definition is rather wider, "participator" broadly means
"shareholder".
| Additional Guidance: SVM150000 |
