Our client has taken out a loan for a private purchase (unconnected to the business), the way i see this is that they have just reduced their capital in the business, their capital accounts are not negative (£400k in credit) therefore the loan interest should be allowable?
My logic behind this is, that if they set the business up with 100% debt finance, 100% of the interest is allowable, therefore by withdrawing capital to buy something private, they are just re-aligning their capital.
