Corporation Tax Act 2010 section 1064

Certain expenses of close companies treated as distributions

Section 1064 treats certain expenses incurred by a close company in providing benefits to its participators as distributions for corporation tax purposes.

• When a close company spends money providing accommodation, entertainment, domestic services, or any other benefits or facilities to a participator, the expense is treated as a distribution to that participator.
• The amount of the deemed distribution equals the cash equivalent of the benefit, calculated using the same income tax rules that apply to employee benefits in kind under ITEPA 2003.
• The distribution amount is reduced by any sum the participator reimburses to the company, but only to the extent that reimbursement has not already been deducted in calculating the cash equivalent of the benefit.
• Exceptions to this treatment exist under sections 1065 and 1066, and any other express statutory exceptions.