Loan by limited company to connected LLP

Loan by limited company to connected LLP

Didn't find your answer?

I think that HMRC is taking an increasing interest in loans by a limited company to a connected LLP - and seek to apply S419 ICTA 1988 [S455 CTA 2010]. It has been suggested to me that HMRC could be wrong. S118ZA ICTA [now S1273 CTA 2009] applies tax transparency to LLPs 'For corporation tax purposes...'. S419/S455 tax is due from the company 'as if it were an amount of corporation tax ....' but S419/S455 tax is not Corporation Tax. The suggestion is that HMRC is taking a step too far. Is anyone aware of a test case please ?

Replies (2)

Please login or register to join the discussion.

avatar
By MBK
21st Dec 2011 12:48

Have a read of CTM61515

You will see that you will be bullet proof if you make the company a member of the LLP.

However, I have previously taken advice (from a top ten firm tax dept) on loans to connected LLPs where the company is not a member and the advice is that the HMRC guidance is plain wrong on this score. The analogy that applies is that of Scottish partnerships. The legislation clearly requires there to be a loan to an individual. An LLP is a separate legal entity and any loan to it is to that entity. The fact that the members are taxed in a particular way is neither here nor there.

We have a number of clients where this situation subsists and we have never been challenged.

 

Thanks (1)
avatar
By Justin Bryant
23rd Dec 2011 13:32

Part 7A ITEPA 2003

You may want to get refreshed advice on this from the top ten firm tax dept  due to the above.

Thanks (0)