Grant and Another v Watton (Inspector of Taxes): ChD 31 Mar 1999

The question was whether a close company had made a loan to a director. A loan, for this purpose, would include ‘any form of credit’.
Held: Where an arrangement between a company and a participator in the company was entered into which resulted in sums becoming due regularly for services provided to the participator, but never demanded or paid, the result was deemed a taxable loan: ‘In my judgment, on the face of it, credit is granted where payment is not demanded until a time later than the supply of services or goods to which the payment relates. Credit is the deferral of payment of a sum which, absent agreement, would be immediately payable.’

Judges:

Pumfrey J

Citations:

Times 31-Mar-1999, [1999] STC 330

Statutes:

Income and Corporation Taxes Act 1988 160, 36(2)(1)(b)

Jurisdiction:

England and Wales

Income Tax

Updated: 08 April 2022; Ref: scu.80978