Good afternoon,
H/W director-shareholders have invested c£75k into their trading company. They have charged interest at what I understand is a commercial rate. The funds appear to have been comfortably soaked up into working capital (the loan is several years old and there is no record of the original purpose) and there are no investments on the balance sheet, but a bank balance of £50k on a company with £2million Turnover, etc. In other words, the funds are not languishing in a deposit account earning 0.00001% interest.
But the loan has previously been treated as a NON-Trading Loan Relationship. Surely if the funds were applied for trading purposes, then the loan is a trading loan relationship, even though funds were lent by associates, etc?
Much obliged for your thoughts.
Regards,
H
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