A client company has made a loan to an unconnected person which is evidenced by a promisory note and secured by a charge on the borrower's house. The loan is £40,000 and the principal amount stated in the promisory note is £50,500. The repayments are 49 x £1,000 and a final payment of £1,500 which includes £500 legal fees.
The paragraph in the promisory note dealing with early settlement makes it clear that the 'interest' element of the repayments (£200 per month) accrue evenly over the term. The only mention in the note of interest is in the clause dealing with default where interest on the principal (£50.5k) is charged at Barclays base rate + 8%.
I assume that the £200 per month is just treated in the company's accounts and CT600 as interest received, but having never seen a similar arrangement before I'm looking for some reassurance.