In Aspect Capital v HMRC (FTC/71/2012 – 19 February 2014) the UT had to decide whether Aspect Capital (which was a close company) had made loans to employees (who were participators); and if so whether these were chargeable to tax under ICTA 1988 s 419.
Each employee had entered into two agreements with the company: a share acquisition agreement; and a facility agreement. Under the share acquisition agreement each employee incurred the obligation to pay for shares that they had applied to acquire in the company; and they obtained funds to finance the acquisition under the facility agreement. The funds were repayable on a ‘conversion event’ such as the employee leaving the company. The date of payment and the amount payable were therefore uncertain. The tribunal found that these uncertainties did not prevent the amount lent under the facility agreement from being a loan.
The...
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