The Gazette 1988

DECEMBER 1988

GAZETTE

( f ) The proceeds of the borrow- ings must be introduced into the partnership either by way of loan or contribution of capital. ( g ) The money must be used wholly and exclusively for the purposes of the partnership's trade or profession, and ( h ) Any recovery of capital from the partnership must be used to repay the loan, if relief is not to be restricted. In determining whether the con- ditions at (e) and (f) are met, the Inspector will have regard to the following:- ( i ) The loan(s) must be identified (amount, lender and term) (i i) It must be clear that the pro- ceeds have been introduced into the partnership business and used for business pur- poses only. ( i i i ) A loan(s) to finance drawings, directly or indirectly, will be regarded as used for the pur- poses of the partnership's trade or profession. No t e In deciding whether there is a recovery of capital as envisaged at (h), any undrawn profits at the end of an accounting period will not be

regarded as forming part of the capital of the partnership unless they remain undrawn for a period of more than t wo years from the end of the accounting period. • N I X DO RF are p l eased t o a n n o u n ce t he l aunch of t he Senior Partner So l i c i t o rs Compu t er Sys t em w h i c h w i ll be on d i sp l ay at t he So l i c i t o rs and Legal O f f i ce Exh i b i t i on at S t and No. 9, J u r ys Ho t el on 1 5 - 16 No v emb e r, 1 9 8 8

8 Ha r d s h ip The Revenue indicated that their general approach to the imple- men t a t i on of the terms for borrowings up to 30 November 1985 will be reasonable, taking into account all the circum- stances. Hardship cases will be looked at by reference to the date of the borrowing and the purpose for which used. 9 Gene r al The acountants mentioned they were anxious to reach a workable arrangement on Section 36. However, it had to be understood that individual taxpayers would have come to their own decision on whether the new rules should be challenged through the appeal procedures. Append ix Pa r t ne r sh i ps: relief in r espect of i n t e r est Se c t i on 3 6 , F i nance Ac t 1 9 74 B o r r ow i n gs up t o 3 0 No v embe r, 1 9 85 (a ) It must be clear that relief for the interest on these borrow- ings cannot be obtained under any other provision, e.g. under Section 81, ITA 1967. ( b ) Except in the case of loans in excess of £10,000, the pur- pose for which the borrowings were obtained need not be indicated but all loans must be identified to the Inspector and a s t a t ement s how i ng the principal outstanding at 30 November 1985 and the bal- ance of the repayment period remaining must be furnished. ( c ) There must be no departure from or variation in the terms on which the original loan was made ( d ) The Inspector will retain the right to view any case where it is considered that the con- cessional relief has been abused. B o r r ow i n gs a f t er 3 0 No v ember 1 9 85 ( e ) Borrowings after this date mu st c omp ly w i t h t he requirements of Section 36, Finance Act 1974. Technical Department November 26, 1987

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