Finance Act 2018

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Amendment of section 438A of Principal Act (extension of section 438 to loans by companies controlled by close companies)

20. (1) Section 438A of the Principal Act is amended by—

(a) substituting the following for subsection (1):

“(1) In this section—

‘loan’ includes advance;

‘relevant arrangement’ means any arrangement, the main purpose, or one of the main purposes, of which is to avoid or reduce a charge to tax under section 438.”,

and

(b) inserting the following after subsection (3):

“(3A) Where a participator, or an associate of a participator, in a close company is party to any relevant arrangement, as a result of which a loan is made to a participator, or an associate of a participator, which, apart from this section, does not give rise to a charge under subsection (1) of section 438, that section shall apply as if the loan had been made by the close company to such participator, or such associate of a participator, as the case may be.”.

(2) Subsection (1) shall apply to a relevant arrangement that is entered into on or after 18 October 2018.