Commentary on Sections Example 3 £150(Pe) – £50(E) = £100 Section 187: Aggregation of loans by close company to director
727.This section provides for the aggregation of certain loans on an election where the borrower is a director of a close company which is the lender. It derives from section 160(1B) and (1BA) of ICTA.
728.Subsection (1) sets out the circumstances when the section applies.
729.Subsection (2) allows the lender to elect for aggregation for a tax year to apply to the borrower.
730.Subsection (3) explains the effect of the election.
731.Subsection (4) places a restriction on which loans may be aggregated.
732.Subsection (5) says by whom and how and within what time limit the election may be made. See Change 158 in Annex 1 regarding the reference to “the Inland Revenue”.