I know this is an old post but I had to join to reply.....
To Northern Lad and EEK for their response to someone who was asking a perfectly reasonable question (about as it happens a possibly permissible act if the secretary were a shareholder). Since it is actually a participator loan where a director in a close company is typically a subset, then sorry but you were wrong, it is not restricted to Directors. Perhaps you would like to read the section from the HMRC manual below referring to the tax implications. I by the way am a professional tax adviser and both I and the other participator in my company who is not a director make very good use of participator loans.
For the avoidance of doubt this is not intended to be a full account of the implications of loans to participators, just a reminder to take with a pinch of salt the "advice" or comments of those that make surly comments on the knowledge of others without evidence to back it up. Especially when they are actually wrong.
From the HMRC publication on loans to participators
Section 455 tax
Where a close company makes a loan or advances money to an individual who is either:
a participator in the company
an associate of a participator
then, unless the loan or advance was made in the ordinary course of the close company's business and that business includes the lending of money, or relief under S458 Corporation Tax Act 2010 is due the close company is due to pay tax under S455 Corporation Tax Act 2010. S455 applies only if the company is a close company at the time the loan or advance is made.
Where tax has been paid in earlier years under S419 Income and Corporation Taxes Act 1988 any relief due should be claimed under S419(4).
A participator is any person having a share or interest in the capital or income of the company. Commonly loans or advances are made to directors of close companies (who are also participators) through their loan accounts. Where an individual participator's or director's loan account is overdrawn this should be reviewed to consider whether the company is liable to pay S455 tax.
I hope that helps to clear up your confusion
Originally posted by eek
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To Northern Lad and EEK for their response to someone who was asking a perfectly reasonable question (about as it happens a possibly permissible act if the secretary were a shareholder). Since it is actually a participator loan where a director in a close company is typically a subset, then sorry but you were wrong, it is not restricted to Directors. Perhaps you would like to read the section from the HMRC manual below referring to the tax implications. I by the way am a professional tax adviser and both I and the other participator in my company who is not a director make very good use of participator loans.
For the avoidance of doubt this is not intended to be a full account of the implications of loans to participators, just a reminder to take with a pinch of salt the "advice" or comments of those that make surly comments on the knowledge of others without evidence to back it up. Especially when they are actually wrong.
From the HMRC publication on loans to participators
Section 455 tax
Where a close company makes a loan or advances money to an individual who is either:
a participator in the company
an associate of a participator
then, unless the loan or advance was made in the ordinary course of the close company's business and that business includes the lending of money, or relief under S458 Corporation Tax Act 2010 is due the close company is due to pay tax under S455 Corporation Tax Act 2010. S455 applies only if the company is a close company at the time the loan or advance is made.
Where tax has been paid in earlier years under S419 Income and Corporation Taxes Act 1988 any relief due should be claimed under S419(4).
A participator is any person having a share or interest in the capital or income of the company. Commonly loans or advances are made to directors of close companies (who are also participators) through their loan accounts. Where an individual participator's or director's loan account is overdrawn this should be reviewed to consider whether the company is liable to pay S455 tax.
I hope that helps to clear up your confusion
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