Close Companies

1
Close Companies

• A close company is one which is under the control
  of
• five or fewer participators, or
• participators who are directors (no matter how
  many)
• There are separate definitions for the terms
  control, participators, directors, associates
  there are also exceptions to the basic definition

2
(No Transcript)
3
Close CompaniesPublic Ownership Exception

• A company which is prima facie close is not a
  close company if at least 35 of its voting power
  is beneficially held by members of the public
• Members of the public include
• Non-director individuals
• Non-close companies
• Trustees of approved pension schemes
• Persons who are not principal members

4

• A principal member is a member who
• has more than 5 of the voting power
• is one of the persons holding the five largest
  percentages of voting power
• If the principal members hold more than 85 of
  the voting power, the public ownership exception
  does not apply

5
Close Company Consequences

• Benefits extended to non-working participators
• cost of provision treated as a distribution
• not allowable for corporation tax
• participator pays HR tax as though a dividend
• Loans to participators
• CT at 25 paid on loans not repaid within 9
  months of end of AP (repayable when loan is
  repaid)
• if loan is written off it is treated as a net
  dividend on which HR tax is payable
• loans up to 15,000 to full-time workers who do
  not own more than 5 of the shares are exempt
• No SCR for a Close Investment Holding Coy
• a CIHC is non-trading or non-property holding