If I put £100,000 as working capital into a Spanish company, can this company provide £100,000 to my wife and myself as a personal loan at 6% per annum for a buyto-let property in the UK? Can I offset the interest amount against the rental amount received from the property?

Arthur Weller replies:
The company can certainly lend you the money. For the interest to be allowable against the rental income, see www.gov.uk/hmrc-internal-manuals/property-incomemanual/pim2110 that this is allowable if the rate is a commercial rate of interest, made on a normal commercial basis. There are rules for a close company lending money to a participator (see www.gov.uk/hmrc-internalmanuals/company-taxation-manual/ctm61500), but a company not resident in the UK cannot be a close company for these purposes (see www.gov.uk/hmrcinternal-manuals/company-taxation-manual/ctm60105). However, it is not clear to me whether this Spanish company is subject to UK corporation tax (e.g. is it centrally managed and controlled in the UK: see www.gov.uk/hmrc-internal-manuals/internationalmanual/intm120060)?