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I know it's a busy time so will appreciate any contributions.....

I have a client who was a partner in a two partner business.  The final accounts of the partnership showed that my client was owed a substantial amount and his partner was overdrawn, so effectively he was owed the amount from his ex-partner.

After the cessation of the partnership his ex-partner was made bankrupt and he has never recovered any of the money owed to him re his partner's account.

Is this a capital loss for tax purposes under S253 TCGA 1992 - "loans to traders".  The balance of his partner's account could have been a mixture of capital introduced and accumulated profits so it doesn't seem to fit into the category of a "loan", but I can't find anything more specific.  

Is it a loan to his ex-partner which would qualify as a loan to a trader?


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As always

Brief and to the point. I concur.

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Thanks for your responses.  I have been advised that, if the actual amount of capital introduced less any repayments can be identified, a claim could be made for a capital loss - not under the "loans to traders" section, just as a loss of capital, which it is.

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I don't think so

From your description it is not that the partnership made a loss, merely that the wrong partner spent the money. Any recovery from the partner is precluded by the bankruptcy.

If you were describing money introduced to a company and not repaid there would be a potential loss claim but partnerships are not the same.

I would be interested in any supporting links for legislation to your information re capital loss

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The advice was that he had invested capital and it had been lost.  I wasn't given a statutory reference for this.  The reality is that he invested capital and it was lost, although I'm not sure this is sufficient.  I know there are specific references to losses on loans to limited companies. 

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