[CTM61605] Close companies: loans to participators and arrangements conferring benefit on participators: Repayment of- assignment/novation
Assignment or novation of debt
It may be claimed that a loan has been repaid through either assignment or novation of the debt. It is important to establish the full facts surrounding the various arrangements and the book-keeping steps before deciding whether the arrangements amount to an assignment, a novation or something else and what the consequences will be in terms of repayment of the loans or charges on the participator under ITTOIA05/S415.
As a general rule in contract law, liabilities cannot be assigned because a person is entitled to know to whom he is to look for the satisfaction of his rights under a contract.