Loans that have gone bad
In today’s climate many business owners have taken out personal loans to try and keep their business running. If all goes according to plan tax relief is available on the interest and the loan is repaid as business improves. If interest is charged to the business this is taxable on receipt.
If the worst happens and the business fails then there should be a capital loss. This may be of limited use, but it is probably better than nothing.
Cathy Corns is a tax adviser and a partner at Mercer & Hole. The views given in this blog are personal to the author.
Date: 14th August, 2009
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