Directors Loan WITH interest for home improvement

[Jessica@WhiteFieldTax]

Don't start buggering around with this IMO...

^ wise words

[TheCyclingProgrammer]

I agree with NLUK about not messing around with this stuff as there's probably some kind of anti-avoidance provision against it but I think IRMe makes a reasonable point - does the tightened bed and breakfasting provisions account for the scenario where a loan from Company A is repaid before 9 months by a loan from Company B? If its over £15k then it probably could be (as there's probably an intention to take another loan from Company A in the future to re-pay Company B) but if it's below £15k it would probably work.

[IRMe]

TCP summed up my thoughts in a more succinct way. B & B rules would prevent you taking another loan from the same company within 30 days, but a loan from elsewhere? Would there be a difference in taking it from another Ltd rather than say using a short term commercial loan, or one from Italian Mo down the pub, to settle the debt before taking it out again later on.

Its only really a theoretical exercise since buggering about in tax matters can wind up in the worst of places.

[northernladuk]

I agree with NLUK about not messing around with this stuff as there's probably some kind of anti-avoidance provision against it but I think IRMe makes a reasonable point - does the tightened bed and breakfasting provisions account for the scenario where a loan from Company A is repaid before 9 months by a loan from Company B? If its over £15k then it probably could be (as there's probably an intention to take another loan from Company A in the future to re-pay Company B) but if it's below £15k it would probably work.

While I was looking for those links I was also looking for a case I thought I had seen where HMRC had proved the intention was to B&B so taxed it as a normal payment not a loan. If you are trying to deceive the HMRC that this is a loan by whatever methods of extending it I would expect you are extremely likely to get pulled up on it and the intention questioned which would surely fail.

I can't see this working in any other format that it'll be ok if I don't get caught.... the cost if you do could be eye watering.

I can't actually find it but wouldn't this be exposed under 'piercing the corporate veil'? A loan would be a contract no?

The term “piercing the corporate veil” is a legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders.

Broadly speaking, the Supreme Court made it clear that this concept cannot be used to make those who control limited companies party to contracts entered into by companies they control.

If this was viable we would all know about it and it would be in the contractor guides.... and it's not.

[TheCyclingProgrammer]

While I was looking for those links I was also looking for a case I thought I had seen where HMRC had proved the intention was to B&B so taxed it as a normal payment not a loan. If you are trying to deceive the HMRC that this is a loan by whatever methods of extending it I would expect you are extremely likely to get pulled up on it and the intention questioned which would surely fail.

If the loan is over £15k then I completely agree - it would almost certainly fail the "intentions and arrangements" rule. But if under £15k this rule doesn't apply, just the 30 day rule, so presumably it wouldn't matter where you borrowed the money from to repay Company A (it could be Company B or a friend etc.) so long as you didn't take another loan from Company A within 30 days you should be OK.