Readers' forum: Loan arrangements

Mr A is UK resident and domiciled. In August 2016 he loaned £720 000 for two years at 8.25% interest to B Ltd a UK property development company. Payments are allocated first to accrued unpaid interest then capital.

In August 2017 Mr A loaned £500 000 to Mr C on similar terms. Both loans financed two unconnected small property developments.

Mr C is one of three directors of B Ltd and holds one of three issued ordinary shares. Mr A is not connected with either. No loan repayments have yet been made but Mr A holds first legal charges over the properties.

If the loan agreements are varied so that capital is repaid before accrued unpaid interest or the terms are extended to five years will a tax charge arise for Mr A? And will any eventual shortfall in loan repayments be bad...