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Store credit card - Interest charged

Department store charges interest to its customers on store credit cards.

Would this be non trade credit (D111) or just trading income?

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I'd treat it as trading income...

... but come a loss-making period, I'm sure HMRC would disagree with me.

Since there isn't a separate finance company, I assume it's a single department store, rather than a national chain.

That being the case, the credit card holders are probably just the modern day equivalent of its "account" customers.  On that basis I'd argue that it is a party to the loan relationship in the course of activities integral to its trade (they're tantamount to trade debtors).

I'm sure HMRC will have a different view and go all British Nuclear Electric over it.  the case is a good read if you need to know about back-end decommissioning costs, but it's got naff all to do with loan relationships.  I had to concede on a slightly different argument because the Inspector advised me that if it did go to tribunal, HMRC would take it all the way (through the courts). But I'm not bitter!

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By blok
27th Apr 2012 12:47

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Thanks.  I have treated it as non trade credit but since the company is profitable it is purely a cosmetic point in this case.

It is a small department store (two locations), t/o £4m.  I can see both sides.

 

"back-end decomisioning costs"

 

sorry I just dont have the energy.

 

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