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Company Advances Amounted To Loan Relationships

By Mark McLaughlin, October 2018

The appellant company carried on business in the wildlife sector. It took a 50% shareholding in another company (BFL), which operated a website to develop a worldwide community for birdwatchers and general ornithology. The shareholders’ agreement provided that the appellant would make funds available towards BFL’s working capital requirements, on which interest would accrue.

By 31 March 2015, the amount of the accumulated debt due from BFL to the appellant was £1,517,643. In the years to 31 March 2013, 2014, and 2015, advances to it by the appellant were £151,188, £150,388, and £150,388 respectively. No interest was paid by BFL, and no repayments were made of any money advanced to it. In its corporation tax returns for

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