Companies with investment Flashcards
Tax implications are that the
expenses incurred in managing the invetsments are automatically deducted from total incoem such as managing expenses.
Management expenses include
Commissions
CA on plant used for management activities
Reasonable salary and redundancy payments
Unavoidable expenses such as audit fees and rent
What is the definition of a close company
A UK resident company that is controlled by either 5 or fewer shareholders OR Any number of shareholding directors.
When is a subsidary a close company
If it’s parent is also a close company
What is the rate of S455?
33.75%
When is S455 tax repaid?
9 months and one day after the accounting period in which it is repaid.
If the loan is written off what happens?
The company will still recieve the refund in the normal way so ti is just a cash flow issue.
For the director that owes the loan, it is treated as a distribution as a dividend
HMRC pay
Interest on the amount up to the point that they pay
Excepted loans
Penalty tax / S455 does not apply where:
The loan is less than £15,000
It is made to a full time director or employee
The borrower and associates do not own more than 5%
If a benefit is provided to a shareholder and it is not udner normal employment income benefit rules
It will be treated as a distribution and disallowed on the tax comp and taxed on the shareholder as a dividend
Close invetsment holding company
Is a close comany which is not a trading comany and is not a member of a trading group
Pays tax at the main rate whatever it’s level of profits and still counts as an associated company
