Case Law

Legal advice used by both the company and also the director/shareholder was accessible as a benefit in kind on the director. Xi Software Ltd v Laing (Inspector of Taxes) 2004 SpC 450

In Stephens v T Pittas Ltd 1983 STC 576 it was held that a sum of money misappropriated by a participator was not considered a loan.

A UK close company lent money to its chairman and the Inland Revenue issued an assessment for income tax. The company argued that the loan was made in the normal course of businesses. The Special Commissioners agreed and held that the taxpayer made loans in the ordinary course of business and no liability arose under the UK equivalent of section 438 TCA 1997. Brennan v Deanby Investment Co 2001 STC 536

In Greenfields v Bains 1992 STC 746 the taxpayer unsuccessfully argued that their liability had been satisfied by arranging for a third party to assume it.

The participator incurred a debt when the company provided services and for which payment was made at year end. Grant v Watton 1999 STC 330

An overdrawn director’s account was held to constitute a loan to a participator. Joint v Bracken Developments Ltd 1994 STC 300

In Earlspring Properties v Guest 1995 STC 479 a company was obliged to give notice under this section and failure to do so constituted neglect.

Whether interest was chargeable on a directors’ loan. 90TACD2022