Where in a period, a loan has been made to a participator in a close company and the loan has not been repaid in the period, Company needs to complete and supplementary form CT600A Loans to participators by close companies.
A close company is broadly a company:
A participator is any person having a share or interest in the capital or income of the company.
A 'close company' is one which is under the control of five or fewer participators, or of any number of participators who are directors (S439 CTA 2010, previously S414 ICTA 1988). A 'loan' within S455 CTA 2010 includes the situation where a participator incurs a debt to the close company (S455(4)(a) CTA 2010, previously S419(2)(a) ICTA 1988), for example by overdrawing a current or loan account.
There are two exceptions where S455 CTA 2010 does not apply.
An 'associate' of a participator includes any relative or partner of the participator and the
trustees of any settlement of which the participator or their relative is, or was, a settlor(S448 CTA 2010, previously S417(3)(a) and (b) ICTA 1988).
Methods by which a loan can be 'repaid' include depositing money into the company's bank account, crediting the participator's current or loan account
with a dividend, director's remuneration or bonus, or book entry.
The term 'release' refers to a formal procedure that normally takes place under seal for a consideration, whereas 'write off' is a wider term that does not necessarily require formal arrangements and could include acceptance by the company that the loan will not be recovered and has given up attempts to recover it.