Connected Party Loans

Connected Party Loans

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I have two cases which I hope the wise gurus out there can assist me with. They involve the (potential) writing off of loans between 2 parties.

1. The 2 companies are not part of a group as such, but are 100% owned by the same person. I assume they are clearly connected. The write off of loans made between them has no CT consequence, i.e. no relief for the debtor but no "income" for the creditor either.

2. The 2 companies are separately owned, but the 100% owners of the respective companies are married to each other. One company has lent money to the other. Is this a connected loan and does the same treatment as above follow?

Many thanks indeed if anyone can confirm - I can provide more info if required.

Richard Bailey

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By rjwbailey
14th Mar 2009 14:54

Thanks again
So in case no 2, if the debt were to be released, would the debtor have an expense allowable (bad debt written off?) against CT and the creditor have taxable "income"?

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