Taking stock

My client was director and shareholder of a limited company in the building industry.

The recession has bitten and the company has been forced to cease trading. In an attempt to keep the business going my client had already remortgaged his house and introduced about £50 000 into the company.

Unfortunately all this did was postpone the inevitable and he was unable to turn things round.

The company still exists and our client is currently taking stock of his new-found situation and is wondering whether he can continue the business but on a smaller scale – without the subcontractors and the debts.

Can he still claim tax relief for the interest on that part of his mortgage for the loan to the company?

He has some investment and property income that he could set this interest against. Does a period of non-trading or change in the scale...