Income Tax (Trading and Other Income) Act 2005 section 417

Person liable

Section 417 identifies who is liable for tax on loans or advances from close companies, including rules for partnerships and exceptions where borrowers have died or trust settlements have ended.

• Where a loan or advance is made to a partnership, any individual partner is liable for the tax charge
• In all other cases, the person who actually received the loan or advance is the one who bears the tax liability
• Where more than one partner is liable (as in a partnership loan), the tax is shared between them on a just and reasonable basis
• Special rules apply where the borrower has died (section 419) or where the loan was made to trustees of a trust that has since ended (section 420)