CTM61130 | Close companies: capital payments to settlors: interaction with CTA2010/S455 & CTA2010/S463
From HM Revenue & Customs · Company Taxation Manual
(formerly ICTA88/S419) and (formerly ICTA88/S421)
ITTOIA/S633 and can both apply to the same transaction(s) or arrangement(s). However, Section 633 takes precedence over and displaces liability under Section 463 ().
So, strictly, a transaction could give rise to a charge on the company and on the settlor.
Example
Company B is owned 50% by individual D and 50% by the trustees of D’s settlement. When Company B lent money to D that transaction attracted:
a charge on the company,
and
an ITTOIA/S633 assessment on the settlor; this assessment was based on the amount of the loan grossed at the aggregate of the basic and additional rates in force in the year of payment (ITTOIA/S640 (1)).
Unlike tax under , tax under is not repayable in any circumstances, though ITTOIA/S638 provides for abatement of charge where the same money is loaned, repaid and loaned again.