I do not know if I am overthinking this matter. But it must be a very common situation when cash-only tradesmen are involved.
Husband and wife set up discretionary settlement a few years ago by transferring two rental properties into it. They are also trustees of this settlement.
Trust income is more or less being allowed to accumulate within the settlement as a reserve against potential property repairs, particularly because one of the roofs may need replacing in the future.
I have strongly advised Trustees to pay for all trust expenses from the trust bank account.
However, in the real world, some tradesmen will only accept cash (e.g. annual gas checks, plumbers fixing tap washers etc.) and so refuse to accept any settlement cheque. So Trustee ends up paying cash from own pocket and much later (if they can remember) the Settlement reimburses the Trustee.
Are these cash transactions to be construed as loans, and do they fall foul of the income tax anti-avoidance rule of the De Vigier tax case (De Viger v IRC [1964] 2 All ER 907, [1964] 1 WLR 1037, HL).
Since there is an expectation of repayment, they look like loans to me.
Or am I just going daft.
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I think you are spot on. This is clearly within the De Vigier ruling-the purposes of the loans are immaterial.