Bad debt write off - definition of associated/connected company

Bad debt write off - definition of associated...

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Just wondering what constitutes connected/associated companies from the point of view of allowing a bad debt write off for CT?

If person A has a 100% share in Company X and only a 49% share in Company Y (the other shareholder Person B holds ALL the other 51%) and Company Y has gone into liquidation owing Company X money is the write off allowable for CT for Company X  because the Person A did NOT have had a controlling interest in Company Y which has gone into liquidation?

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By User deleted
27th Aug 2015 10:42

Holding controlling shares or voting power is not the only test for 'control' (s.472)

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By arthurallan
27th Aug 2015 16:07


Thanks taxguru. I had had a look at S472 and as Person A didn't hold most of the shares (only 49%), didn't hold most of the voting rights (same as shares ie 49%) and had no other powers via the articles/memorandum I felt that probably he did NOT have control because the other guy could always trump him via his 51%.

I just wondered if there should be anything else to consider. Would it be possible for you to confirm whether there might be anything else to consider?

Many thanks

Arthur

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By User deleted
27th Aug 2015 16:32

Given that s.466-472 apply specifically to Part 5, I think 'that's it!', despite a veiled threat posed by s.466 in referring to s.1122 CTA/10.

However, there are situations in which control could still apply:

the 49% shareholder is the sole director whilst 51% fellow is just a shareholderboth are directors but the Board passes a resolution making the 49%director in absolute control of the affairs of the company, and the other director being silent 

etc

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