Q: We are currently working on a management buyout (MBO) for a client and wanted to check whether there any tax issues concerned with the application of section 459 Corporation Tax Act 2010 (CTA 2010) on a loan from a related company which will be used to fund part of the acquisition.

Mr A and Mr B are equal shareholders of ABC Ltd (ABC). They are also equal shareholders of XYZ Ltd (XYZ). A senior manager of ABC, Mr Z is acquiring the shares of ABC via his company, FX Ltd for £1.5m. Note that £500,000 of the consideration has been funded by Mr Z from his personal resources and the remaining is being funded by a loan from XYZ.

A: The loan made by XYZ could be within the scope of s459 CTA 2010, a provision which is intended to counter attempts to circumvent s455 director loan rules. The provision can apply irrespective of the presence of any commercial reasons for the arrangements.