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Certain settlements made by close companies.
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29.— The Principal Act is amended—
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(a) in section 20(1) by substituting “sections 436, 436A, 437, 816(2)(b) and 817” for “436 and 437, and subsection (2)(b) of section 816”,
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(b) in section 130(1) by inserting “, 436A” after “sections 436”, and
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(c) by inserting the following section after section 436:
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“436A.— (1) (a) In this section—
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‘member’, in relation to a company, includes a participator in the company other than a loan creditor of the company;
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‘relative’ has the same meaning as in section 433(3)(a);
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‘relevant settlement’, in relation to a close company, means a settlement made by, or on behalf of, the close company other than a settlement which—
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(i) is made expressly for the exclusive benefit of one or more than one person, who is neither a member of the company nor a relative of such a member, and
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(ii) does not allow at any time for the possibility of providing any benefit to such member or relative;
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‘settlement’ has the same meaning as in section 10 and ‘settled’ shall be read accordingly.
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(b) For the purposes of this section, any participator in a company which controls another company shall be treated as being also a participator in that other company.
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(2) Where any amount, in money or money’s worth, is settled by, or on behalf of, a close company on or after 21 January 2011 in connection with a relevant settlement, that amount shall, for the purposes of the Tax Acts, be deemed to be a distribution by the company to the trustees of the settlement.
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(3) Where, on or after 21 January 2011, an individual who is or was a member of a close company, or a relative of such an individual, receives directly or indirectly an amount in money or money’s worth out of, or indirectly attributable to, assets comprised in a relevant settlement (whenever made) in relation to the close company, then so much of that amount as exceeds any consideration given by the individual or relative of the individual, as the case may be, to the extent that the individual or relative is not otherwise chargeable to income tax in respect of so much of that amount, shall be deemed for the purposes of the Income Tax Acts to be annual profits or gains of that individual or relative, as the case may be, chargeable to tax under Case IV of Schedule D for the year of assessment in which the amount is received.
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(4) This section shall not apply as respects a relevant settlement where it is shown to the satisfaction of the inspector or, on the hearing or the rehearing of an appeal, to the satisfaction of the Appeal Commissioners or a judge of the Circuit Court, as the case may be, that the settlement was not made as part of a scheme or arrangement the purpose or one of the purposes of which was the avoidance of tax.”.
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