Corporation Tax Act 2010 section 461

Exception to section 460

Section 461 provides an exception to the anti-avoidance rule in section 460, which treats certain loans made by intermediaries as if they were made directly by a close company to a participator.

• The section 460 charge does not apply where no person has made arrangements (outside the ordinary course of business) connecting the loan or advance with the acquisition of control of the lending company
• Similarly, the charge does not apply where no arrangements connect the loan or advance with the close company providing funds to the intermediary lender
• A close company is treated as providing funds to the intermediary if it directly or indirectly makes a payment, transfers property, or releases or satisfies any liability of that intermediary
• The burden of proof lies with the taxpayer to demonstrate that no such arrangements exist in order to benefit from this exception