S455 and Unpaid Share Capital

Tax Question

I am preparing accounts for a new client Company which has a sole director/shareholder. In reviewing the records I can see that the shareholder hasn’t paid for the £1000 £1 shares that were subscribed for. Will the unpaid amount of share capital be treated as a loan to a participator and attract a tax charge under CTA2010 s455?

Tax Answer

It used to be HMRC’s view that a s455 tax charge would apply on an issue of shares by a close company where the shares are issued ‘called up’ but remain wholly or partly unpaid as there was a debt from the shareholder to the company.

However, in 2014 there was a case that went to the First Tier Tribunal and it was found that the unpaid liability was not a debt to be repaid on money that had been borrowed, it was a liability to be paid to honour an investment promise so no s455 charge would be due.

HMRC do take the view that there is still some scope under circumstances where it is deemed that a participator (or associate of) has used unpaid share capital to extract profits or other value from the company without a tax charge. They have updated their guidance following the RKW Ltd v HMRC case and full details can be found in their Company Taxation Manual at CTM61537 (https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm61537). This guidance also touches on a point with regards to the introduction of Targeted Anti-Avoidance Rules.

Related Tax Questions

MTD Self-employed

My client had turnover from self-employment of £55,000 in the 2024/25 tax year, which means he has to enter Making Tax Digital (MTD) from 6 April 2026. The turnover will be much less in th

View Answer

Non Residence & Personal Allowance

My client is a UK national but resident abroad. My software does not grant personal allowance. Are they entitled to the allowance and how do they get it?

View Answer

Self Assessment Penalty Guidance

My client has received a penalty for a late Self Assessment tax return. Is there anything that can be done to have the penalty removed?

View Answer

Loans to Participators and Budget Changes

The rates of tax on dividends are going up on 6 April 2026. Will this change the amount of tax I pay as an individual on the dividends I receive? What if I overdraw my director’s loan

View Answer

HMRC Nudge Letters

My client, a limited company, has recently received from HMRC a letter stating that they believe that the company may have paid the wrong amount of corporation tax. The letter asks my client to che

View Answer

Deceased Estate Management Expenses – What can be done with them?

Deceased Estate Management Expenses – What can be done with them?

View Answer

Vantage Fee Protect Customer Testimonials

Having changed over to Vantage a couple of years ago we have been very satisfied with the service. Especially the claims handling and technical advice lines for both our firm and insured clients on employment and business legal matters. The webshop Vantage offer allows our clients to join and pay electronically. This positively impacts our bottom line and makes things simple and efficient for our clients.

Linda Giles Chartered Accountant

Real people, real results

Vantage Fee Protect provide market leading Tax Fee Protection
Insurance schemes through accountants.

We use Vantage for our tax fee protection policy which is good value. The tax and VAT helplines are really helpful, manned by real people who answer the calls in good time
Jennie Gillam, Red Fish Accountancy Ltd
Truly professional staff, especially the account manager who handled my account. Thoroughly recommended.
Craig Hanlon, Beancounter Accountancy Services
Fantastic professional service & a very straightforward process. We have made a claim on our policy and everything was clear & simple and our client was happy with their outcome
Lydia Read-Potter, Booksmart Accounting Ltd
I would like to compliment Yasine on his great service and professionalism in handling my company's needs and dealing with all queries surrounding the mailing. Also responding very quickly to emails.
Dave Howe, BAS Bristol
I have used Vantage for over 10 years and never contemplated moving to another provider which I think says it all. Very friendly/competitive in pricing and professional.
Ronald Brotherton, Brothertons Accountants Limited
Always top service and on-hand to deal with any queries. Definitely recommended!
David Wall, A J Bennewith & Co
Having switched to VTFP, we were immediately really impressed with the advice line service, the advisors are brilliant, no waiting times, you nearly always get an advisor on the first time of calling.
Diana Miller, Robinson Miller
We’ve been using your VAT and Tax specialists lately – they’re a godsend – really knowledgeable, straight talking, patient and professional We’re so happy with Vantage.
Debby Wetton, Sealy Shaw
We are very pleased to see that the gross premiums number has gone well beyond the promised mark, your bespoke marketing strategy has played an integral part.
Alan Paterson, AAB LLP
We moved our tax fee protection scheme to Vantage in 2015. The whole process of switching providers turned out to be painless, thanks to the help of the Vantage team.
O’Reilly Chartered Accountants
The Team at Vantage are always a delight and made the switch seamless, we have got so much more out of our Fee Protection scheme since switching to Vantage.
Francesca Tricarico, Future Cloud Accounting
The service has been seamless from start to finish – with clear communication, efficient support, and a real understanding of our needs.
Haroon Sarwar, HMS Accountancy
All the dealings that I have had with you have been excellent. Always helpful and polite; makes my job easier thank you. 10/10.
Janet Brimfield, Thorne Widgery
We use Vantage for our tax fee protection policy which is good value. The tax and VAT helplines are really helpful, manned by real people who answer the calls in good time.
Jennie Gillam, Red Fish Accountancy Ltd

Don’t be shy,
get in touch

Vantage Fee Protect provide market leading Tax Fee Protection
Insurance schemes through accountants.

"*" indicates required fields

This field is for validation purposes and should be left unchanged.
Privacy Policy Consent*