Tribunal victory for interest loan payments

A first-tier tribunal has ruled that an advance interest payment is deductible, provided the loan is taken out for allowable purposes.

In the Garrett Paul Curran and the Commissioners for HMRC tribunal, Curran took out loans in 2002, 2003 and 2007 from three different companies. 

These were to fund onward loans to close two companies carrying on a property investment business. 

The loan terms included a provision that interest must be paid at commercial rates over the 30-year tenor. Curran and the lender agreed he could pay the outstanding interest in advance at a discounted value. 

He claimed tax relief on the loan repayments he made over the corresponding tax years, as payments of interest. 

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