Shamus wrote:

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I know that in certain circumstances CT61's do not always need to be completed and in this case I think that as it was all repaid within a year (?) in one lump mean then such need only be reported on the CT600 (for reference see this case law : http://www.bailii.org/ew/cases/EWHC/Ch/2016/2492.html)

If it is felt that a CT61 needs to be completed then they need to requst that from HMRC as it cannot be downloaded, but here's a handy link for them (or preferably their accountant) to be able to get their head around it : https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/383833/ct61-notes-2010.pdf

It would be a loan repayable in installments as and when affordable.  The loan itself would be paid back in approximately a  year, but spread over two accounting periods 2016/17 and 2017/18.  Interest would be added to the loan so remaining £450 payable in the last quarter (CT61) Does this mean that only one CT61 would need completing? Or should interest be deducted from each repayment.  ie £150 £135 to loan £15 to interest, which would require a CT61 every quarter presumably.

The last bit

The loan should be for commercial reason on commercial terms related to the risk involved.

It's a loan between two companies to assist one through a temporary sticky period. (see below on interest) 

There can be no whiff of collusion for tax avoidance. i.e. creation of artificial losses not substantiated by necessity.

The loss would only be £450 for Company B, unless it is felt that 10% interest is too low?  Would it be better if the loan was repaid without interest? Like I said, the two people know each other and the only reason for interest is because it was assumed interest had to be charged.

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 Thanks Shaun, more complicated than I realised, so this one may well be passed to an accountant.

Cheshire wrote:

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Hi John  Hi Joanne

So I am going to assume that the lending company does not themselves have not given any security for any Bank borrowing (if they did they would find they are most likely in breach of the terms).

Re the 'documentation' - in my view they really need to pin down the definition of the repayment terms as 'as and when affordable' can lead to problems proving its on commercial terms and not just between two buddies Also, as I understand it, the problem with unrelated company to company loans can come if at some point the lender decides to write off the said loan, then the exact nature of their 'relationship' would be called into question as it is the nature of that relationship which will determine how such is then treated (accounts and tax for both parties). It could be viewed that the loan was in fact from the Director of Company A to Company B instead. Out of interest - is there any kind of other commercial connection between them?

No Commercial connection between the two companies, although Director B has another company that trades with Company A.  As far as I'm aware there's no intention to write off the loan afterwards.  Would it be better to treat it as a loan from Director A to Company B, by way of Director A borrowing from his company?  

Also by doing the loan at nil interest means it is NOT on commercial terms, which it needs to be as Shaun says. Commercial terms needs to be a percentage above the Bank of England Base rate, such as you would pay if the money was lent from a formal lending institution.

So 10% would be ok, assuming loan was repaid within a year?  Is it better to add interest at the end of the loan (one CT61?) or on the monthly repayments? (lots of CT61's )  

Not had the chance to review the case law Shaun included as yet - parked in my ever growing pile of must read. CT61s - good luck with getting those out of HMRC though....yes relies on the old pigeon post, once youve spent an hour on the phone trying to get through (for the third time of asking!) Oh and they will not send you a batch of blank forms out - oh no, why make it simple!!!!!!!

Making tax less digital?  What's wrong with them sticking it on .gov.uk?

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