Loan to buy interest in close company
I have a client who is a 40% shareholder and director in a recently formed company which is trading in the field of buying residential properties, refurbishing and then selling them on.
This director has a substantial open credit facility with a well known Building Society jointly with his wife and secured against their principal residence. Despite his ability to make a valid claim for non-miras interest against his personal Schedule Income (arising from an associated company in which he is a 45% shareholder) on the loans drawn down and injected to assist in buying property, he wants the trading company to pay the interest and claim relief for corporation tax purposes.
Given ICTA 1988 s 368(2) does the latter automatically preclude the company accepting the responsibility for paying the interest and claiming relief - there is no intention of making a double claim.
Any thoughts urgently please.