»Ê¹ÚÌåÓýapp

Loans or repayments of loans are usually more easily identified than other capital sums. »Ê¹ÚÌåÓýappy may, however, be hidden in global entries for debtors or creditors in the balance sheet. This could largely depend on the degree of ‘formalityâ€� of the loan, particularly where the founder or long-term managing director of a family company is involved.

»Ê¹ÚÌåÓýapp scope of the term ‘loan or repayment of a loanâ€� is not restricted and goes beyond formal arrangements with terms for interest and repayment.

»Ê¹ÚÌåÓýapp term ‘loan or repayment of a loanâ€� does not, however, necessarily include a debt that constitutes unpaid purchase money. For example, if a settlor sells an asset to his or her trustees or a connected company but leaves the purchase price uncollected until a later date, the settlor has not necessarily loaned the amount of that purchase price to the trustees (see Ramsden v CIR, 37TC619).

Once the existence of a loan is established, however, the concept of consideration is irrelevant. »Ê¹ÚÌåÓýapp words of ITTOIA/S634 (which define ‘capital sumâ€�) apply that test only to capital sums other than loans or repayments of loans. ITTOIA/S633 therefore applies equally to a loan carrying interest at a very high rate as to an interest-free loan.

»Ê¹ÚÌåÓýapp term for repayment is also not relevant for the purposes of Section 633 which applies whether the loan is on call or for a period of many years. (See, however, CTM61090 as regards certain temporary loans.)