How do the loans to participator rules interact with Limited Liability Partnerships (LLPs)?

This is a freeview 'At a glance' guide to LLPs and the loans to participator rules.

At a glance

A Limited Liability Partnership (LLP) may be formed of individual members and corporate members, or it may work in close contact with a service company.

When a Close company makes a loan to an LLP and where an individual member of the LLP is also a participator in the close company a Corporation Tax charge may apply.

The s.455 CTA 2010 'loans to participators' tax charge will apply if a close company makes a loan or advance to an LLP where one or more of the members is:

  • A participator in the company, or
  • An associate of an individual who is such a participator, and
  • The loan is still outstanding nine months from the year-end of the relevant accounting period of the company.

This is an issue that may inadventently pop up when a LLP and close company are run in tandem and there are shared services and re-charges or if a benefit is in some way confered on the participator via the structure.

The s455 loan to participator charge may also arise when a partnership or sole trader is run in tandem with a company.

Useful guides on this topic

Close company loans toolkit (loans to participators)
This guide takes a detailed look at the Corporation Tax treatment when a close company makes a loan to a participator (director-shareholder). It also provides links to our guides for individuals on the making of loans to companies.

What is a Close Company?
What is a close company? What is a participator? Why does it matter? If you are not sure, start here for a basic guide and signposts to more detailed guidance elsewhere on our site.

Close companies: Definitions & control
This guide goes over basic definitions of close companies and control.

Running an LLP in tandem with a company
It is possible to run a Limited Liability Partnership (LLP) or other form of partnership in tandem with a company. Partnerships can also have corporate partners. What needs to be considered?


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