loan to associated company

loan to associated company

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I have two companies and want to make a loan from one to the other - any issues? Both myself and my wife own both companies
Frank Lurness

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By User deleted
18th Jun 2007 13:27

Associated company loan
http://www.freshfields.com/publications/pdfs/2007/may21/18589.pdf

At first I thought you can't as I was thinking about Company Act 1985. This appeared to have changed. You can lend company between the two with shareholders approval accordng to company act 2006 (I am not sure if this section is in forced yet as some sections are to be finalized)

Also, your company article of association needs to allow that (most off the shelf would have allow that anyway)

Tax - just normal corporation tax and normal arm length rules. E.g. if you charge another company 0% or 20% interest in order to shift tax liability, you will have problem. 5-7% are probably OK.

Hope this help.

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