An individual (A) is being lent money from a company (Company B). The individual is a Director and 100% owner of his own company (C). His company (C) is guaranteeing the loan. He is then loaning the money back to his own company (C) which it will use to buy shares in Company B. A tangled web I know. Are there are BIK issues with the fact that Company C is guaranteeing the personal loan to him ?
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Presume not public companies but private companies involved here, thus sidestepping financial assistance rules?
Any reason why such a convoluted route, any reason Company B does not lend funds direct to Company C?
Does Company B have a loan to participator issue after company C acquires shares in Company B, as A is a participator in company C , does Company C control Company B after the transaction?
https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm60110
I think a BIK likely may arise re the director and his company re the guarantee though struggling to find express provision (have not looked very hard). I have in past come across proposed bank lending to a partnership where a limited Company was to guarantee the partnership loan from the bank and the bank's solicitors were not happy with such an arrangement, but that was a fair time ago so not sure if such reservations are still appropriate.
(Edit first line final paragraph May for Will)
The whole arrangement seems highly artificial and contains various unnecessary steps - which should be a warning sign. You should be asking what the overall objective is and how each individual step contributes to achieving that objective.
Where's the fraud (or where would it have been under the original proposal)?
What has the bank got to do with it?