B2.226 Loans and quasi-loans outstanding on 5 April 2019
Specific rules were introduced by F(No 2)A 20171 to deal with the disguised profit rules (B2.225) in relation to loans or quasi-loans made before 6 April 2017 (but on or after 6 April 1999) that remain outstanding immediately before the end of 5 April 2019.
The rules closely mirror the disguised remuneration rules discussed at E4.137A. The discussion below refers back to this commentary on the disguised remuneration rules where appropriate and only looks in detail at those parts which do not directly use the disguised remuneration concepts and definitions.
Where the rules apply, a loan or quasi-loan is to be treated as a 'relevant benefit' and therefore taxed as trading profit. A loan is defined in identical terms1 (with minor drafting changes) as is it for the disguised remuneration rules, see E4.137A1.
The amount of the benefit is the outstanding amount of the loan or quasi-loan immediately before the end of 5 April 2019 or, if the relevant benefit is an 'approved fixed term loan' on 5 April 2019 (see below), immediately before the end of the approved repayment date.
The amount of the relevant benefit is treated as profits of the trade for 2018/19 or, where applicable, the tax year in which the approved repayment date falls. If the trader has ceased to carry on the trade it is treated as a post-cessation receipt30.
The amount of a loan is outstanding if the principal amount (excluding any capitalised interest)