Company loan to LLP

[tom 7000]

The company has £0.5m in its bank account and interest rates are so low its negilgable. The director wants to borrow £100k to pay down his flexible mortgage and save 5%. So I said no because of the benefit in kind and the S419tax.

He said, '' yes, I agree, but if my co lends it to my LLP, is that still a BIK and S419able, because if its not the partnership can then lend it to me and theres no partnership benefits''.

I think it has to be a benefit and S 419able otherwise everyone would do this?

Do you agree

Puzzled of Farnborough

[section 44]

Sounds s419able.

For loan relationship purposes it is as if the company has lent the money to itself (as opposed to, say, being a nothing because of transparency of the LLP). That would support the loan being treated as made by the company as opposed to the LLP.

[Incredulum]

It seems that the company lends it to the LLP (which I think is the Director's interest, not the company's) by virtue of the Director's position within the company, and that is what is 419 able?