Rolling director's loan with 31 day breaks in between

[northernladuk]

Brilliant idea.

Wrap it up in a scheme. SAy it is QC approved.

What could go wrong?

This QC doesn't approve, well, of brollies.

https://mobile.twitter.com/jolyonmau...24609745518593

[BrilloPad]

This QC doesn't approve, well, of brollies.

https://mobile.twitter.com/jolyonmau...24609745518593

He will approve of anything if paid enough.

[northernladyuk]

It appears the OP is considering using it to invest it bitcoin. What could go wrong?

Denominate the loan in bitcoin and it should be fine.

[SeanT]

Denominate the loan in bitcoin and it should be fine.

That is inspired!

[Tinfed]

You can take up to £15k and still be within the scope of the 30 day bed and breakfasting rule (any more than this and the 30 day rule is superseded by a much broader rule that allows HMRC to treat any further loan as a continuation of the previous without any time limit).

OP - what are you trying to achieve? Are you simply trying to avoid paying the s455 charge on an unpaid loan? Because that's all this arrangement does. Ultimately the loan will have to be repaid at some point.

Thanks for the reply! I guess that rules that option out then. What is the much broader rule that allows HMRC to treat further loans as a continuation of the previous?

Yes I am looking to avoid a s455 charge by repaying the loan within 9 months and using it for the short term cash flow benefit in the mean time.

[BrilloPad]

Thanks for the reply! I guess that rules that option out then. What is the much broader rule that allows HMRC to treat further loans as a continuation of the previous?

Yes I am looking to avoid a s455 charge by repaying the loan within 9 months and using it for the short term cash flow benefit in the mean time.

Why not just pay a dividend?

[northernladuk]

Thanks for the reply! I guess that rules that option out then. What is the much broader rule that allows HMRC to treat further loans as a continuation of the previous?

The common sense one?

[BrilloPad]

The common sense one?

If common sense does not work, they will lie, cheat and bully to get the one they want. Retrospectively if needed.

[northernladyuk]

If common sense does not work, they will lie, cheat and bully to get the one they want. Retrospectively if needed.

HMRC can only work within the law. The sovereign and democratically elected British Parliament makes law.

[TheCyclingProgrammer]

What is the much broader rule that allows HMRC to treat further loans as a continuation of the previous?

There are two bed and breakfasting rules - one for loans under £15k (the 30 day rule) and one for loans of £15k and above (the "intentions and arrangements" rule).

https://stevejbicknell.com/2015/04/1...fast-the-loan/

TLDR; if the loan is >= £15k and any repayment of a loan is made where there is an intention or arrangement to take another loan at any point thereafter then the s455 tax still applies, even if this loan is taken after 30 days. I don't know where the burden of proof lies but knowing HMRC I suspect they'd treat any large subsequent large loans that look like a continuation of the previous one with suspicion and it would be down to you to prove otherwise.

I guess another way to look at this is that HMRC aren't overly bothered by small loans (i.e. loans under £15k) hence the more relaxed 30 day rule but for larger loans they want the flexibility to apply s455 whenever they think somebody is pulling a fast one.