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S. 455

I act for two clients who are 50/50 shareholders in a limited company and also 50/50 partners in another, separate partnership. The two businesses operate out of the same premises and share overheads and joint expenses etc. on an agreed basis.

The clients in their capacity as directors of the company have overdrawn DLA balances which have properly been declared to HMRC. However, the company also has a debtor balance due from the partnership. There has historically been an inter-business balance between the company and the partnership caused by recharging of proportions of expenses and/or simply borrowing between the two business from time to time to fund cash flow requirements. Sometimes the balance has been credit, sometimes debit.

This has not been a problem in the past. However, in 2010/11 for some reason the inspector has raised a query, claiming that the inter-business balance falls within S.455 and should therefore have been declared on the supplementary pages on the CT600.

Now, any balance arising on this account has always been for business purposes. It has never represented anything used personally by the partners (that's what the DLA is for). It seems to me that the Inspector wants to treat the inter-business balance simply as an extension of the DLA, and I'm sure that S.455 ever intended this.

Does anybody out there have previous experience of this situation? Observations as ever gratefully received.


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petersaxton |
petersaxton's picture

HMRC are correct, sorry.

zeofiles |

I agree - liable to s455 tax charge - but no BIK

DMGbus |
DMGbus's picture


blok |
blok's picture

S.455 Ltd co and partnership

julian.sims |
julian.sims's picture

To clarify blok's comment ...


Make the company a member of the partnership...

George Attazder |
George Attazder's picture

To clarify BKD's comment

George Attazder |
George Attazder's picture

To clarify/correct George's comment


I don't know...

George Attazder |
George Attazder's picture

Thank you.....

Cuchulainn |
Cuchulainn's picture