Surplus reserves

We act for various small private limited companies that have surplus cash reserves. If the companies invest these monies in a bank they will get very little interest and in the present financial climate there are even concerns over the security of the money.

Some of the directors/shareholders who have offset mortgages have considered using the company money to offset against their mortgages.

The idea is that they will open an account in their name which they will hold in trust for the company.

The company money will be transferred into this account and it will be offset against their mortgage.

The directors/shareholders will derive a benefit from this transaction by saving the interest on the offset amount.

At the same time the company is out of pocket as it has lost the interest on that amount. In order to avoid any tax liability on the director/shareholder we...