Inheritance Tax Act 1984 section 202

Close companies

Section 202 identifies who is liable for inheritance tax arising from a transfer of value made by a close company.

• The close company itself is primarily liable for the tax on its transfer of value, with secondary liability falling on participators and individuals whose estates increased as a result, if the tax remains unpaid after it is due.
• A person to whom 5% or less of the transferred value is apportioned has no personal liability for the tax; each other person is liable only for the proportion of tax matching their share of the apportioned value.
• An individual whose estate increases because of the company's transfer cannot be liable for more tax than the amount by which their estate increased.
• No person other than those specified in this section can be held liable for tax arising from a close company transfer of value.