BIM37750 - Wholly and exclusively: duality of, or non-trade, purpose: loans/advances to others: whose trade purpose? contents

S34 Income Tax (Trading and Other Income) Act 2005

Introduction and layout of guidance

For companies chargeable to Corporation Tax, the tax treatment of loans and advances is governed exclusively by the loan relationships regime in Parts 5 and 6 Corporation Tax Act 2009. Detailed guidance is at CFM30000. The guidance that follows only applies to other categories of taxpayer.

On occasion a trader may advance money to another concern and claim a deduction if it is not repaid. Where the trade comprises or includes money lending the issue is straightforward. In other cases problems may arise. Therefore, in the first instance you should establish in detail what the trade comprises.

The court decisions in a number of cases are considered as follows:

1. BIM37753

   Duality of, or non-trade, purpose: loans/advances to others: temporary loans made by brewer
2. BIM37755

   Duality of, or non-trade, purpose: loans/advances to others: advances to secure supply of raw material
3. BIM37760

   Duality of, or non-trade, purpose: loans/advances to others: advance to secure a 10-year supply of raw material
4. BIM37765

   Duality of, or non-trade, purpose: loans/advances to others: architect buying shares in client companies
5. BIM37770

   Duality of, or non-trade, purpose: loans/advances to others: loans by a firm of solicitors
6. BIM37775

   Duality of, or non-trade, purpose: loans/advances to others: solicitor guaranteeing client's borrowing
7. BIM37780

   Duality of, or non-trade, purpose: loans/advances to others: payment under guarantee given to exhibition
8. BIM37785

   Duality of, or non-trade, purpose: loans/advances to others: by film writer to company to produce a film
9. BIM37790

   Duality of, or non-trade, purpose: loans/advances to others: to allow subsidiaries to meet their obligations
10. BIM37795

    Duality of, or non-trade, purpose: loans/advances to others: to secure sale of subsidiary?
11. BIM37797

    Duality of, or non-trade, purpose: loans/advances to others: for own trade or for subsidiary's?