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Borrowed money for capital introduced.

Quick question, if client borrows 100k to purchase a business from a family friend can he get any tax relief or of set that of the profits of shop?

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27th Apr 2012 23:05

Quick answer

No

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28th Apr 2012 00:41

I see but....
Can someone give me a longer answer.

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28th Apr 2012 07:49

Speed and length

You seem too concerned about speed and length.

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By BKD
28th Apr 2012 08:46

I too .....

.... would like a longer answer

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By BKD
28th Apr 2012 09:00

Because ....

.... I don't necessarily believe that "no" is the correct answer.

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28th Apr 2012 09:26

Quick, long and longer

Without the OP expanding on his "quick" question we would not be able to advise without writing a "long" answer.

I could give chapter and verse on capital gains tax rules. I could consider interest. If the OP is not an accountant it would be better if he got an accountant. If he is an accountant it is worrying.

Why don't you write what you think I should write?

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By BKD
28th Apr 2012 09:40

In which case your answer ought to have been

something along the lines of "it depends". Because, without full knowledge of the facts, one cannot possibly say whether "yes" or "no" is the correct answer. So, how - in the absence of sufficient information - did you conclude that the answer in this case is "no"?

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28th Apr 2012 09:51

It depends?

From the information provided.

If that was the information I had available I wouldn't claim anything.

Hardeep is an accountant so he should be able to look into it further. I'm amazed that an accountant would ask such a simple question. If he has a client in that position he should be able to ask the relevant questions rather than ask us to write a paper on the subject.

Using your logic most of the questions on this site should be answered with "it depends".

If the OP can't be bothered to give more information then I am not going to coax it out of him.

Hopefully he will find the book I recommended useful.

Next week I look forward to the question: "I'm a sole trader, what expenses can I claim?"

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By BKD
28th Apr 2012 10:19

Someone got out of bed too early this morning

but you are right - there are a lot of questions that cannot be definitively answered "yes" or "no" without further information. Which is why one should be (a) wary about giving advice here and (b) even more wary about following any advice here.

And which makes your initial response to the question possibly incorrect. Saying that you would not claim relief based on the information provided is an answer to a different question. The question was "can relief be claimed?", not "would you claim relief?". No-one was asking you to coax further information out of the OP, but in that case the only valid answers to the question asked are "it depends", or "possibly".

If the OP can't be bothered to give more information then I am not going to coax it out of him.

Which begs the question why you could be bothered answering the question with a less than helpful answer in the first place. That's a rhetorical question, by the way - I know the answer.

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28th Apr 2012 10:21

Help them who wont help themselves?

I think you've got it wrong. I love getting up early.

You complain that my answer is less than helpful but I would submit that the question is less than helpful. Don't you think that the OP should have given a first stab at his views? Most serious accountants on here would give their views on an issue before asking everybody to tell them all they know.

My answer is correct. If interest has been charged he could claim that but interest wasn't mentioned. The client could have agreed to do something in return such as build a house or look after their children. The possibilities are endless. The answers are endless.

Let's stop the madness of "quick" questions. If you want to ask a question at least make an effort to provide sufficient information to enable a reasonable answer and, if possible, give your own views.

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By BKD
28th Apr 2012 10:49

Missing the point(s)

You complain that my answer is less than helpful

I'm not complaining

but I would submit that the question is less than helpful.

Agreed

My answer is correct

Disagreed - your answer might be correct

The possibilities are endless. The answers are endless.

Agreed - which means that a straight "yes" or "no" cannot be the correct answer to give. In the final analysis, one of those responses may prove to be the correct one, but the only "correct" answer to the question asked is "maybe", or a variant thereof.

Let's stop the madness of "quick" questions. If you want to ask a question at least make an effort to provide sufficient information to enable a reasonable answer and, if possible, give your own views.

Agreed

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28th Apr 2012 10:57

We seem to agree on most things

My answer is correct.

There's no interest or any other allowable expenses mentioned.

If you are saying that my answer is incorrect then every answer would be incorrect because there MAY be information not disclosed unless every answer was "maybe".

 

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By BKD
28th Apr 2012 11:13

Nope

There may be no interest mentioned, but that omission doesn't mean that there is in fact no allowable interest. You appear to have made the assumption that the omission means that there is no interest. If the OP responds by saying that the loan is interest-free, then your answer is more likely to be correct. If he responds by saying that there is interest, then your answer may be incorrect.

So your answer might prove to be correct, or it might be incorrect. Until the facts are established, it is neither.

If you are saying that my answer is incorrect then every answer would be incorrect because there MAY be information not disclosed unless every answer was "maybe"

I never said that your answer was incorrect - it could well be correct, we just don't know at the moment. Of course one doesn't have to answer "maybe" - one can answer "yes" or, as you have done, "no" but in doing so, or indeed offering a longer answer, it is normal behaviour to express one's assumptions and caveats. You asked me earlier to write what you should have written. I would therefore offer as a suggestion - "On the assumption that there is no interest or other expenditure connected with the borrowing, my answer is 'no' ".

We will need to agree to disagree, but a straight "no" to the question, as asked, is not the appropriate answer.

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28th Apr 2012 14:59

Thank you.
Gentleman, thank you for your input.

Peter, being in a pratice means exactly that, it takes practice! I am 20-something accountant wanting to simply confirm my answer.

I agree regarding the interest element and will certainly buy that book.

Peter, i will leave you with quote if I may, ""Be kind, for everyone you meet is fighting a hard battle." Plato.

Thank you for reply gentleman.

Back to work!

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