I'm helping a partnership draft their annual accounts. The spouse of one of the partners has lent the partnership a sum of money. The lender is not a partner in the firm.
Referring to security for the loan the agreement states
"Security for the loan will be by the adoption of the fixtures & fittings. During the period of the loan, the fixtures and fittings will be transferred in the lenders name. The lender shall have full title to the fixtures & fittings on completion of an independent valuation to be paid for by the lender. Any additional fixtures and fittings bought during the term of the loan will automatically be adopted by the lender who shall similarly have legal title over them."
Normally the F & F would remain on the balance sheet and the security would be dealt with by way of a note but I'd be interested to hear what others consider should be the correct treatment for the fixtures and fittings in this instance and the implications for VAT and capital allowances.