Company A in partnership with individuals B and C who also own company A. 90% profit allocated to company A thereby taxed at corporate rate. However 100% profit drawn by B and C so the balance sheet of the partnership shows hugely overdrawn accounts for B and C balanced by substantial credit balance due to company A. This allegedly gets around the issue of overdrawn loan accounts in company A and/or higher rate tax for B and C whilst ensuring that 90% of profit is taxed at company rate. That would naturally go on the CT600 of the company and be taxed accordingly but the blank I have is company accounting and whether that would this create an issue under s455 etc for sums due from the partnership to company A. Any thoughts would be welcomed as this would otherwise appear a rather obvious and simple way of circumventing overdrawn loan account issues whilst achieving minimum tax rates.
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I have seen this done as well, and when I last looked into it, which was some time ago, I satisfied myself that the company's loan to the partnership was not caught by S455 or the interest BIK provisions.