HMRC have identified companies that may have underpaid s.455 tax in respect of loans made to participators. The agents of affected companies are being contacted by email, asking them to check whether relief has been correctly claimed in Corporation Tax returns that were filed before April 2025.
Participator loans
Where, in an accounting period, a Close company makes a Loan to a participator (or an associate of a participator) that is not repaid in that period, a 33.75% tax charge can arise under s.455 CTA 2010.
- Where all or part of such a loan to a participator is repaid, released, or written off within nine months of the end of the accounting period, relief from the s.455 tax charge can be claimed in the Corporation Tax return supplementary page CT600A.
For Corporation Tax returns submitted before 1 April 2025, it was possible to claim relief in the CT600A for an anticipated future loan repayment (i.e. a repayment that was expected to be made before the nine-month deadline but after the date the Corporation Tax return was filed with HMRC).
HMRC campaign
The Institute of Chartered Accountants in England and Wales (ICAEW) is highlighting that HMRC are now contacting agents by email where they have filed Corporation Tax returns for clients with future loan repayment dates in respect of participator loans.
- HMRC are concerned that there is a risk of tax loss where the anticipated loan repayment was not made in the amount or on the date expected, and the company has not amended its Corporation Tax return to reflect this.
The emails being sent to agents ask that they:
- Contact HMRC by 28 November 2025 for details of the clients that may be affected.
- Assist those clients in checking and amending (if necessary) their Corporation Tax returns.
- Advise affected clients to make a payment on account to HMRC if additional tax is due, to reduce the interest payable.
From 1 April 2025, it is no longer possible to file a Corporation Tax return with a future repayment date for a loan to a participator.
Useful guides on this topic
Directors' loan accounts: Toolkit (subscribers)
What is the tax treatment for an overdrawn director's loan account? What are the consequences of an outstanding loan to a participator?
Loans to participators (Close Company Loans toolkit)
What is the Corporation Tax treatment when a close company makes a loan to a participator (director-shareholder)? How do the 'bed and breakfasting' rules work? What are the concerns with indirect loans, upstream loans and MBOs?
Close companies, definitions & control
What is a Close company? What are the tax consequences? What is a Participator? What is meant by control of a company? What are the tests for Control?
How to reclaim s.455 tax paid on loans to participators
How do I reclaim s.455 tax on loans to participators? Which form do I use? Where can I find the link?
External link