Loan or No Loan?
10 years ago my brother gave me some money. He drew up a document which he signed which said, "Brother has made a personal loan to gtsix of £kkkkk. Brother agrees that this loan will not carry interest and the principal will not have to be repaid." This was to be used in my business which he had a significant interest in. Although the use of the "personal loan" was not stated in the original document, he drew up later documents that refer to this use (e.g. ". . . and £kkkkk was loaned to gtsix to use in the business").
Now he says that we had a verbal agreement "that you would repay the personal loan with rolled up interest at a reasonable rate after about ten years". He says it could not have been a loan without interest or repayment as that would be classified as a gift.
So loan or gift?
If a loan then it implies an obligation to repay at some stage (which by default is on demand). If it is found to be a loan, does it also create a liability and have tax implications?
My argument is that the reason that there was no expectation of repayment or interest was that he would get some advancement from the interest he had in the business (e.g. sale of his shareholding). Does this hold water?
- Overseas Company 59 1
- Dividend and pension with no salary 113 1
- Accountex Exhibition 138 1
- You know you're an accountant when... 1,460 45
- Private use for Small hotel owner: historic rules 118 1
- Help with small charity CT600 please!! 154 1
- Vat on solicitors charges 185 5
- Career change - how to get relevant experience? 1,047 11
- Late leaver notification 181 4
- A little bit of politics 472 6
- Could i ask for a bit of help please. 302 6
- Filling in my self assessment 688 14
- Should small companies be audited? 983 41
- Mileage claim restriction 370 3
- Self Assessment employed and self employed 161 1
- Overlap profit 573 15
- What does PITA mean? 449 9
- career 349 2
- Help required please 473 10
- Skype treating businesses as private consumers; no VAT invoices 468 1
- Sanzar 454
- Digital marketing focus group 377
- Sage troubleshooting for employee who has previously claimed SMP 347
- Continuity Agreement 292
- Are commercial mortgage cashbacks subject to Corporation Tax ? 280
- Sainsbury's mangement 268
- Buyback 266
- Avanti Accounts 256
- Entrepreneurs' relief (ER) for EMI shares 201
- Iris and Miicrosoft 365 174