it's not a legitimate loan for business purposes so there's no treatment of this as an expense of the business.
Appreciate that's the opposit to what your client is looking to hear but try to get them to see it in logical terms. Why would HMRC want to sponsor your clients family member to go to university as that basically is the premise of this.
HTH,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
You say it is not " a legitimate loan for business purposes".
I will give a little more information.
The client is a handyman, and he says he has to go to Uni to do a plumbing course, which will lead to a qualification to become CORGI registered, and obviously he can do more work.
Cannot this be classed as Staff Training?
How is this any different to borrowing the money from a bank?
Geez, Uni's have gone down a bit since my day! Plumbing courses at Uni!!! lol
That aside, looking purely at the logic of the scenario the picture has now changed slightly from being a uni course for a family member to a necessary (?) course for themself for a business that is already trading???
If the course is required for the continuence of the business (not the starting of a new one) then it would be an allowable expense (see other posts on here discussing similar scenarios). However, the question goes deeper than that into where the money is coming from which makes me assume that the client is expected to pay interest on this loan.
Qualification for tax relief of a legitimate loan for business purposes would be covered under helpsheet 340 (#1) but the purpose of the loan we're talking about here doesn't seem to be covered by that so I would say that the loan would be personal to the director (outside the business) who would then introduce the money to the company via the directors loan account and payment for the course would be made from that (again, if this is a legitimate business expense which to be honest I'm not yet convinced of).
This arrangement assumes that the company pays no interest on the loan. Interest paid on the directors loan account requires the completion of form CT61 which can neither be downloaded or ordered online but must be ordered from the accounts office at shipley.
As mentioned above, the legitimacy of the course is a whole different matter that we've debated a few times on here (normally in relation to the expense of bookkeeping courses).
The recipient of the interest will also have a tax liability arising from the interest received under the arrangement (so another potential opportunity for your services there!)..
As always my answers are given from a limited company perspective.
kind regards,
Shaun.
#1 http://www.hmrc.gov.uk/helpsheets/hs340.pdf
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
He may be wasting his money to get a GORGI qualification, as that is no longer the required qualification for gas instillation.
It may also be the case that although it is a legitimate business expense, this type of training cost may be a capital expense, as it is the proprietor gaining the qualification, and therefore not deductible against tax
