Intercompany Loan Issues

[Liverpool]

Any advice on the issues surrounding Intercompany Loans.
I am majority shareholder in 2 companies and would like to loan money from Company A to Company B to deal with cash flow issues for a period of up to a year.
Cheaper to do it this way than take a Salary and give a Directors loan - dont want the hassle/cost of going to banks at the moment.

 

[ND 1978]

Liverpool

If the companys are part of the same group, there shouldn't be a problem.

Otherwise, you may have an problem under section 31 Comps Act 1990, and will need to get the companys golden shared.

 

[command]

if you are the shareholder of both they are probably not part of a group. Intercompany loans and payments are more than likely going to be treated as though they were payments made to you and therefore the usual directors loan rules will apply and there is a chance you will be liable to income tax on the payments,

ND 1978 is dead on refering to section 31 and your best bet is to have the situation explained to you by an accountants before you make any payments or give any loans. If you decide to form a group to facilitate the loans you will also have the issue of having to have an audit carried out each year.