Overdrawn Directors loan accounts?

Overdrawn Directors loan accounts?

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My clients are a husband and wife partnership who also have a limited company (both 50/50).

The company has lent the partnership £100,000 with interest at 5% pa to allow the partnership to purchase land for use in its business.

My question is in two parts...

Does the charging of a commercial interest rate and loan being gradually repaid mean that it is exenpt under s456 CTA 2010?

If not then, i was on a course recently where it was suggested that if the company became a partner in the partnership (there are good legal reasons to do this and it would be supported by a partnership agreement etc), then the liability to s455 would be extinguished when it became a partner because the loan would have been converted into a partners capital account. Does anyone agree with this and if so is there a supporting argument?

As usual all help greatly appreciated:)

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By User deleted
10th Jan 2013 16:09

First question(s)

What type of partnership and where?

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By nick farrow
10th Jan 2013 17:52

loan from company to partnership in which company member

http://www.hmrc.gov.uk/manuals/ctmanual/ctm61515.htm

 

 

 

 

 

 

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By The Minion
11th Jan 2013 11:56

sorry didnt click the straight away button!

@BKD it is a bog standard non LLP partnership based in England.

 

@nickfarrow thanks Nick i searched high and low for that!.

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