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Our client has a bed and breakfast business. He and his family live on the premises and there are ten rooms available for customers. The property purchase was largely financed by a commercial loan and we are unsure how much interest we should add back for private use.
Alternatively, is there an argument that we do not need to make any add-back because there is a requirement
for the owner to live on the premises to enable him to run the business?
Readers' thoughts on this subject and how any add-back should be calculated would be most welcome.
Our client has a bed and breakfast business. He and his family live on the premises and there are ten rooms available for customers. The property purchase was largely financed by a commercial loan and we are unsure how much interest we should add back for private use.
Alternatively is there an argument that we do not need to make any add-back because there is a requirement
for the owner to live on the premises to enable him to run the business?
Readers' thoughts on this subject and how any add-back should be calculated would be most welcome.
Query T16 852 — Hotelier.
Reply by N.K.:
Interest is allowed as a deduction in computing business profits if it is incurred wholly and exclusively for the purposes of the business (see ITTOIA 2005 s 34). The question raised is whether 'any add-back' of a proportion of loan...
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