Interesting idea

We have had an interesting outcome after an enquiry by HMRC. Our client had built up substantial cash in his limited company. He made enquiries from his bank and other financial institutions with a view to investing this but they were all offering miserly interest of only about 0.2% a year.

The client spoke to his neighbour who is a lawyer. He suggested drawing up an agreement so that our client could hold the funds as an “agent” in his own name to increase the annual return to about 2%.

Despite our concern that HMRC would argue he was simply borrowing the funds himself (with the resulting tax consequences) he proceeded withdrew £1m from the company and deposited this in his name.

The bank would only accept the deposit in a personal name and would not allow any reference to the company. The term deposit duly ended...