Verbal contracts: Which are binding and which are not?

In order that interest paid by a director to a company for the privilege of an overdrawn loan account be considered as available to reduce the benefit in kind that would otherwise be chargeable, HMRC insist that there must exist at the time that the interest accrues an obligation on the director to pay interest (which must also of course be paid).

That requirement can of course readily be satisfied by adequate planning and foresight, typically by convening a directors' board meeting and passing a suitable resolution in advance of the event.

The absence of documentary evidence of the existance of an obligation may call into question whether that obligation ever existed. That is of course a question of fact for (ultimately) the Tribunal to decide.

In the context of the above I am interested to know what types of contract are never binding in the absence of written evidence. I am well aware that, for examples, contracts for land need to be evidenced in writing. However I am also aware (but more peripherally so) that certain credit agreements must also be evidenced in writing. A director's loan account is a credit agreement (of sorts) but that does not of itself necessarily mean that it is of a type that requires documentary evidence.

I guess what I am asking is: suppose that we satisfy the Tribunal that the parties had a verbal agreement at the time that interest should be charged, would the Tribunal, despite that conclusion, be obliged to disregard that finding of fact on the basis that the agreement is of the nature which, in order to be binding on the parties, requires evidence in writing?

Thanks.

With kind regards

Clint Westwood