Corporation Tax Act 2010 section 464A

Charge to tax: arrangements conferring benefit on participator

Section 464A imposes a corporation tax charge on a close company that enters into tax avoidance arrangements which confer a benefit on a participator (or an associate of a participator), where the benefit would not otherwise be caught by the existing loan to participator rules or by an income tax charge.

• Where a close company is party to tax avoidance arrangements that confer a benefit (directly or indirectly) on an individual who is a participator or an associate of a participator, the company faces a tax charge equal to the dividend upper rate applied to the value of the benefit.
• The charge does not apply if the benefit already gives rise to a section 455 charge on the company or to an income tax charge on the participator or associate — it is aimed at arrangements that fall outside these existing charges.
• The tax is due nine months and one day after the end of the accounting period in which the benefit was conferred, and if one company controls another, a participator in the controlling company is treated as a participator in the controlled company as well.
• "Tax avoidance arrangements" are defined broadly as any arrangement, scheme or understanding (whether legally enforceable or not) where a main purpose is to avoid or reduce a section 455 charge or to obtain a tax advantage for the participator or associate.