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HMRC internal manual

Business Income Manual

Wholly and exclusively: duality of, or non-trade, purpose: loans/advances to others: whose trade purpose? contents

S34 Income Tax (Trading and Other Income) Act 2005

Introduction and layout of guidance

For companies chargeable to Corporation Tax, the tax treatment of loans and advances is governed exclusively by the loan relationships regime in Parts 5 and 6 Corporation Tax Act 2009. Detailed guidance is at CFM30000. The guidance that follows only applies to other categories of taxpayer.

On occasion a trader may advance money to another concern and claim a deduction if it is not repaid. Where the trade comprises or includes money lending the issue is straightforward. In other cases problems may arise. Therefore, in the first instance you should establish in detail what the trade comprises.

The court decisions in a number of cases are considered as follows: