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How to treat a company loan written off in company tax computation

A Ltd Company made a loan of 30k to a new start up Ltd company back in 2007.

Eventually the new venture company failed still owing the 30k.

The lending company has now sold its freehold factory and there is a gain arising of 50k subject to CT.Can the loss on the irrecoverable loan now be offset against the gain on the factory.?

Thanks for any help

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corp tax

If you write off the loan in the accounts you need to determine whether it is an allowable write off of a loan for corp tax.

Very briefly need to see if is a trading loan or not.

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Non trading

The loans were just amounts made to fund the company's working capital but no intercompany trading took place.

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Loan relationships v Loans to traders

The loan relationship provisions "trump" the relief for loans to traders set out in S.253 TCGA 1992 (because S.253(3) says so).

This would appear to be a non-trade loan relationship, so if the companies aren't connected and recovery of the loan is unlikely, you can recognise an impairment loss and (assuming their are no NTLR credits) create a NTLRD that can either be set against the current or previous year's total profits (including chargeable gains) or carried forward and set against non-trade sources (which I'm fairly certain also includes chargeable gains).

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