Definitions: in this section 'member', in relation to a company, includes a participator in the company other than a loan creditor; 'relative' has the same meaning as in section 433(3)(a); 'relevant settlement', for a close company, means a settlement made by or on behalf of the close company other than one made expressly for the exclusive benefit of person(s) who are neither a member nor a relative and which does not allow any possibility of providing benefit to such member or relative; 'settlement' and 'settled' have the meanings in section 10. Any participator in a company that controls another company is also to be treated as a participator in that other company.

Tax consequences: where an amount in money or money's worth is settled by or on behalf of a close company on or after 21 January 2011 in connection with a relevant settlement, that amount is deemed for the Tax Acts to be a distribution to the trustees. Where on or after 21 January 2011 an individual who is or was a member, or a relative of such an individual, receives amounts from assets comprised in a relevant settlement (whenever made), so much of that amount as exceeds any consideration given by the recipient and is not otherwise chargeable to income tax shall be treated as annual profits or gains chargeable under Case IV of Schedule D in the year of receipt. The section does not apply to a relevant settlement not made as part of a scheme or arrangement the purpose or one of the purposes of which was the avoidance of tax.