close company


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close company

a UK resident company that is controlled by five or fewer participators together with their associates or by any number of participatory directors (together with their associates). Control is determined by the persons having the right to more than 50 per cent of the company's voting rights, share capital, distributable income, or assets on a winding up. A participator is widely defined to include anyone with a financial interest in the company, e.g. shareholders and debenture holders, but excludes those dealing with a company in the normal course of business, such as trade creditors and banks.

There are three potential consequences of close company status. First, any benefit provided for a participator, or an associate, which is not taxable as employment income will be treated as if it were a distribution of profit. As such, its cost will be disallowed in computing the company's profits and will be taxed as income in the hands of the recipient. Secondly, where a loan is made to a participator, or an associate, the company will be liable to pay an amount equal to 25 per cent of the loan to the revenue, unless the loan is repaid within nine months of the end of the accounting period. If the loan is repaid after that time, then the related amount of tax is repaid. Finally, if the company is a close investment company, it will have to pay the full rate of corporation tax regardless of the level of profit. This will happen unless it exists wholly or mainly for certain specified purposes, the main ones being the carrying on of a trade on a commercial basis or investing in land to be let out on a commercial basis to unconnected parties.

References in periodicals archive ?
Government proposals to close company tax loopholes have been broadly welcomed by corporate accountants, although some warned of dangerous uncertainties in the process.
It is wedged up against a fence in a side yard and keeps close company with a billowy, vining star jasmine.
The couple also spent Valentine's Day in different countries, as Seal worked on 'The Voice' in Australia while Klum, 38, kept close company with her friends in Los Angeles at the Soho House.
Nearly Gold kept in reasonably close company with the pacemaking winner until losing momentum with a shocking blunder at the fourth-last.
The Broxall Close company has a turnover of between pounds 70 million and pounds 100million a year and employs 190 people.
It's a small world: Art, architecture and miniature modeling are keeping close company these days in greater Los Angeles.
The Board is of the opinion that the company is a close company.
When the pair split on the turn, after having run in close company for much of the way-Red Bullet going inside and Fusaichi Pegasus staying outside-it was Red Bullet who was travelling much the better.
Peter Coles, warehouse manager at the Buckingham Close company, said: "I've not seen any preview tape of it so I'll be glued to the set like everyone else and I'm setting my video.
In the case, Microsoft argued that the employees were free-lance workers or independent contractors, but the court relied on a 1990 decision by the IRS finding that the workers were common-law employees because they worked under close company supervision and often worked inside Microsoft's offices.
By keeping such close company, the two women learn a great deal about each other's lifestyles, ultimately leaving an enduring impact on both of them.