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15 September 2015
Will a benefit in kind arise on a payment made under a personal guarantee?
Our client has been trading successfully for several years. He carries on his business through a limited company and has about 12 employees most of whom have been working for him since shortly after the business started. Unbeknown to me about six months ago he agreed to act as a guarantor for one of his employees who wanted to rent a property with his then girlfriend. My client wanted to give the employee a helping hand in life – apparently the employee’s relatives were not homeowners and their salaries levels were insufficient to provide a guarantee for him.
Unfortunately it has all gone wrong. The girlfriend moved out and without her income the employee was unable to pay the rent. The landlord then pursued my client who must now pay four months’ outstanding rent plus some additional costs relating...
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