I have a limited company client who wants to loan 40K from his trading company to a new SPV company to purchase a buy to let property. I have not come accross this before and am worried there are tax complications that i am not aware of?.
The trading companys shares are owned by the client and his wife 50/50 and the new SPV company shares will also be owned 50/50 . The loan will be paid back to the trading company out of SPV company profits over the next 15 years.
The way i see it if he loans the SPV company money and charges interest, the interest would be taxable income to the trading company and an expense to the SPV company, essentially cancelling themselves out, so would interest need to be charged?
Am i missing something?
The client does not want to recive the 40K as a dividend and then reinvest in the SVP as both himself and his wife are already higher rate tax payers.