In Stewart Fraser Ltd v HMRC (TC00923 – 1 February) a close company (S) waived a loan to its controlling director (F). It was accepted that this gave rise to a charge to income tax under what is now CTA 2010 s 455 and that this took precedence over the employment income charge under ITEPA 2003 s 188. HMRC issued a ruling that the waiver of loan gave rise to a liability to Class 1 national insurance contributions. S appealed. The First-tier Tribunal dismissed the appeal. Judge Radford observed that ‘the shareholders had not been consulted on the waiving of the loans’ which had been approved by S’s directors. Accordingly it appeared that the waiver was in respect of F’s employment rather than in respect of his shareholding. Therefore it constituted remuneration which was subject to Class 1 contributions.
Why it matters: The First-Tier Tribunal upheld HMRC’s...
