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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loan from company to partnership in which company member
http://www.hmrc.gov.uk/manuals/ctmanual/ctm61515.htm