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Esprit Logistics Management and others v HMRC

In Esprit Logistics Management and others v HMRC [2018] UKFTT 287 (31 May 2018) the FTT found that the reduction of directors’ indebtedness on companies’ loan accounts was chargeable under ITEPA 2003 s 62.

The appeal concerned the income tax and corporation tax treatment of arrangements which involved the releases of loan balances on the directors’ account of close companies. In each case a board minute explained the company’s wish to release sums owed by the director by way of a bonus for the director’s services. A deed was executed and the company paid NICs but not employment income tax on the released amounts. It deducted the sums released from its taxable profits.

The appellants argued that the amounts released were taxable in the hands of the directors under ITTOIA 2005 s 415 at the dividend ordinary rate and not as employment income (ITEPA 2003 Pt 2) ...

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