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Sole or joint loan if account becomes joint accoun

Can a loan from sole lender become a joint loan if the lending account becomes a joint account

Didn't find your answer?

I'm pretty sure the answer is NO but though it worth double checking.

Client made a personal loan to help out the Company of a friend of his. The loan was made from his personal bank account in 2018 with a formal loan agreement.

This bank account was subsequently changed into a joint bank account with his wife in February 2019 (they had married in 2015). The loan plus interest was duly repaid in late 2019 - repaid into this (now) joint account.

As the loan and the loan agreement was originally made by the husband from his (at the time) sole bank account I just wanted to check that the interest would have to be credited solely to him and go on his tax return. Part of the interest could not be credited to his wife.

 

 

Replies (8)

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By Paul Crowley
13th Oct 2020 16:25

The bank account is irrelevant.
Any backdating of documents would be improper to the point of fraud

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By Justin Bryant
13th Oct 2020 16:34

Contrary to what many people here believe, liabilities can only be validly transferred via novation (they cannot be assigned - like an asset can), which requires agreement of both the "transferee" borrower & lender, so no is almost certainly the answer here.

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Replying to Justin Bryant:
Psycho
By Wilson Philips
13th Oct 2020 17:00

I know the threads that you are referring to, but if you were to read them more carefully you will find that no-one was arguing that a liability could be assigned.

I'm not sure why you think that novation would be in point here - H is/was free to assign all or part of the loan to W. Although as Paul says it is probably too late now.

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Replying to Wilson Philips:
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By Justin Bryant
13th Oct 2020 17:43

Amazing how you say: " no-one was arguing that a liability could be assigned" and "H is/was free to assign all or part of the loan to W".

Actually it's not amazing in your case.

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Replying to Justin Bryant:
Psycho
By Wilson Philips
13th Oct 2020 20:14

Oh dear. The penny still hasn’t dropped, has it. Let me try and help you here.

C owes H £x. In C’s eyes the loan is a liability. In H’s eyes the loan is an asset. C cannot transfer its obligation (liability) without formal novation. However, H is free to assign his rights (asset) to W (or to anyone else) without C’s consent.

With a novation the debtor changes, the creditor remains the same.. With an assignment the creditor changes, the debtor remains the same.

Get it now?

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Replying to Wilson Philips:
Psycho
By Wilson Philips
14th Oct 2020 10:33

The silence is telling.

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Replying to Wilson Philips:
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By whitevanman
14th Oct 2020 10:59

Maybe, but I suspect the same comments will be trotted out next time someone posts a question in a similar area (or not even similar).

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By Paul Crowley
13th Oct 2020 16:40

And of course the company has already considered the CT61 and provided a tax certificate
The interest comes Net of tax

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