I have a client who secured an equity investment for their company. The equity investment was supposed to be £250k for 20% of the company. They received a part payment up front of £100k.
The agreement was that the remaining balance of £150k was payable within a specific time limit. If this was not paid then the £100k up front would not be repayable and no equity was required to be released for this. The time limit passed, so my client now has £100k investment without the requirement of giving away any equity in the business. He has a signed legal letter which confirms this.
The question is how is this £100k now treated for accounting and taxation purposes. I assume it becomes taxable income, and was thinking it would be treated in the same way as a grant or subsidy would?