Corporation Tax Act 2010 section 463

Taxation of debtor on release of loan to trustees of settlement which has ended

Section 463 deals with the corporation tax consequences for a debtor company when a close company releases or writes off a loan originally made to settlement trustees, after the settlement has ended.

• Where a close company (X) made a loan to settlement trustees and was subject to the section 455 tax charge, and later releases or writes off the debt after the settlement has ended, the debtor company (Y) is taxed on the amount released
• The section only applies where the entity owing the debt at the time of the release or write-off is a company (Y), rather than the original settlement trustees
• Company Y is treated as receiving taxable income equal to the amount of the loan or advance that is released or written off
• All four conditions must be met: the original section 455 charge on X, the release or write-off by X, the debtor being a company (Y), and the release occurring after the settlement has ended