Is my client trading?

Is my client trading?

Didn't find your answer?

My client makes loans to people in the UK, through an intermediary, and gets paid interest.  People use the loans to buy property (property they can't get traditional mortgages on).  My client's loans are secured on his customer's property.

He makes lots of loans, perhaps 50 per year and they are short term - typically less than 6 months each.

He has c £1m on loan at any one time

He uses his offset mortgage (partly) to source the funds.  He therefore incurs interest expenses.  And no doubt other small expenses too.  I want him to be able to obtain tax relief for these expenses against his interest income and I believe for that to happen I need him to be "trading"

Please could you let me know if you believe that he is trading and if you feel HMRC would also see him to be trading.  Or if you need further information.  He has a 30 page participation agreement with the intermediary and doesn't need a consumer credit licence or to be directly licenced by the FCA

Thank you

 

Replies (3)

Please login or register to join the discussion.

avatar
By RetiredTax
05th Nov 2015 18:17

Trading?
I would want to review all of the paperwork to consider fully as to whether your client is perhaps trading. From the info. provided, my initial thought is this would be challenged by HMRC. Perhaps your starting point should be HMRC manuals ~ BIM20200 The Badges of Trade.
I hope this helps.

Thanks (0)
avatar
By thehaggis
05th Nov 2015 22:35

BIM40805

and BIM40810 covers this topic and sets out the HMRC view

Thanks (0)