CTM61580 | Close companies: arrangements conferring benefit on participators: TAAR: benefit conferred
From HM Revenue & Customs · Company Taxation Manual
The legislation is aimed at stopping money/value leaving a close company and ending up in the hands of a participator or an associate of a participator, where that extraction of money/value falls outside the definition of a loan or advance in .
‘Benefit conferred’ in this section is not therefore linked in any way to income tax/employment income benefits. It has a broader/more general meaning. This is an anti-avoidance provision and it is necessary to take a broad view of the relevant facts and circumstances in each case.
It is aimed at any extractions of value out of a close company, or any scenario by which a participator/associate receives value out of a company which are not otherwise subjected to income tax or are taxed at a lower rate than would be the case if they were taken as remuneration or dividends. Where the value extracted is chargeable as a distribution, say under , then will not apply. If the value extracted is chargeable as a chargeable gain that will not prevent applying in appropriate circumstances.
The legislation can only apply, however, where any money/value actually ends up in the hands of the participator/associate. will not apply where value simply leaves the company, for example in the form of a capital contribution to a partnership, but where there is no benefit to the participator/associate (see for examples as to where it might apply in the partnership/capital contribution context).
If you consider that might apply then please refer the case to CTIS (Technical).