Hi, I need help with essay on Agnew v Commissioner of Inland Revenue. Paper must be at least 2500 words. Please, no plagiarized work!
However, the main advantage of sourcing operating capital through loan or borrowing from lenders is that Black Books could claim tax relief on the interests payable to service the loan (Mead and Sagar, 2006). .However, the main advantage of sourcing operating capital through loan or borrowing from lenders is that Black Books could claim tax relief on the interests payable to service the loan (Mead and Sagar, 2006). But if Black Books had chosen to raise its capital through share capital, it would have been able to dodge the requirements to provide collateral securities necessary for securing the loans. And it would have faced no restriction on the use of its assets which had been used as the collateral securities (Mead and Sagar, 2006). However, Black Books could not claim tax relief on the dividends from share capital, unlike the one from loan capital (Mead and Sagar, 2006). But using share capital appears safe for Black Books (if the company has chosen this method earlier on) because there would be no fear of going bankrupt owing to the restrictions on the utilization of Black Books’ assets placed under the lenders as collateral securities. Hence, Black Books can continue to operate and protect its brand image from being sullied due to insolvency and the take-over of the company’s administration by a new set of managers, who may lack adequate information about the true state of the company (Omar, 2004). Black Books is expected to create debentures, which are the documents detailing the terms of borrowing capital loan from the lenders. Black Books has also indicated in the debentures some floating charges on some or all of its assets so as to fulfill the requirements stipulated by the lenders. However, some formalities must be strictly followed in order to draw up the appropriate debentures necessary for Black Books to get the loan. And each of the formalities has legal consequences as explained in the series of processes below:(a) Black Books approaches Lender to borrow £500,000. the formality here is offering a legal mortgage of the company’s land as a security for the loan in favor of the Lender. .