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Almost all companies will have some loan relationships. However, some items that are commonly assumed to be loan relationships are not (eg outstanding consideration for the sale / purchase of property and inter-company balances relating to unpaid amounts for goods or services, in each case where there is no supporting written instrument). Conversely, there are also items that do not meet the strict definition of loan relationship but which are deemed to be a loan relationship for tax purposes.

This note provides guidance on the definition of a loan relationship. For a discussion of the taxation of loan relationships, see the Taxation of loan relationships guidance note and for a more detailed consideration of the loan relationships regime in its entirety, see Simon’s Taxes D1.7.

For a practical summary to tackling the legislation in this area, see the What is meant by a loan relationship ― practical approach guidance note.

HMRC’s Corporate Finance Manual contains detailed guidance on its interpretation of these rules at CFM30000 onwards.