Loan to participator

[Chanmuganathan]

A 3% shareholder borrowed £13,000 from a company.
Is he a participator of company, for the purpose of S455?
Do the company have to pay S455 tax?
Does he have to work full time for the company to be exempt from S455?

[pawncob]

Surely he becomes one by being a loan creditor.

http://www.hmrc.gov.uk/manuals/ctmanual/CTM60130.htm

[wamstax]

The loan may not be liable under S455 (previously S419) if
Where a close company makes a loan or advance (after 5 April 1990) for any purpose to a director or employee of the close company or of any associated company, (see CTM60210) that loan or advance is not within ICTA88/S419 if all the following conditions are satisfied:

•The amount of the loan in question plus the outstanding amounts of loans made to the borrower does not exceed £15,000.
•The borrower works full time for the close company or any of its associated companies.
•The borrower does not have a material interest (see CTM61560) in the close company or any of its associated companies.

The £13K amount and 3% holding would qualify under the first and last condition and you would need to consider the middle one