I require some clarification on the loan relationship rules for interest.
I have a company with a reasonable amount of tax losses brought forward however I expect to make a good profit this year.
My problem is that I have earnt a significant amount of bank interest in the year.
As far as I undertsand I am unable to offset my B/Fwd tax lossses against this income as it is classed as D Case 3 (non-trading) and so I will have to pay tax on this.
I have incurred some interest in the year also in connection with a loan provided solely to acquire another business and some fixed assets. Can I treat this interest as a D Case 3 expense (as the loan was provided to make a capital investment) or should it be treated as a trading expense (D Case 1)?
Many thanks
Steven
Steven Tall
Replies (2)
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.......but loan provided for investment purposes??
Many thanks for your reply.
I was hoping I could claim that the loan was deemed "non-trading" on the acquisition of the other business as this is 'investment' related. I appreciate it is more difficult to claim for the element of the loan provided to purchase fixed assets.
Do you think this is something the Revenue may accept?
I appreciate there is no definite right or wrong answer (at this stage).
I am just struggling to find any literature explaining the key difference between trading and non trading loans. Can anyone help??
Thanks
Steven
Probably a trading loan relationship
Even though it is on capital account the loan was used for trading purposes. You bought items used in the trade.