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HMRC internal manual

VAT Valuation Manual

Specific applications: apportionment and valuation of membership benefits: compulsory loans that become voluntary donations

At the end of a specified loan period, members may sometimes decide that the club can retain their money permanently. Provided that the specified period has ended and the member was genuinely offered repayment, which he refused entirely voluntarily, the loan can be regarded as having been converted into an outside the scope donation. From this point in time the club will no longer be required to account for notional interest on the “converted” loan.