How to treat company loan to connected company
Ltd company A owned by husband & wife (60:40 shares) and doing very well.
Husband decides to try a new venture (much to our horror as he had no experience in this field) and sets up Ltd company B with same shareholding.
Company A lends £40k to company B at commerical rate of interest (7%) to pay for stock and set up.
Problem arises in that company B makes a large loss in its first year and sells almost nothing. Husband is looking to cease trading and wind the company up.
How do we treat writing off the loan in company A's books?
Does the write off bring no CT relief in company A and would the write off be treated as a distribution to the 2 shareholders? If so, is there any way to avoid this?
Advice much appreciated.
- Closing down - who should buy whom? 676 33
- English Company Owning Property in Scotland 183 1
- NI Contributions in order to claim state pension 275 5
- Lack of Quickbooks Online Coverage 346 6
- Risk Indicators Survey 131 1
- Deceased's Tax Return to date of death 71 1
- Jointly owned property 70 1
- Unpaid Fee's 609 10
- cold file reviewer needed 317 3
- SA302s - Lenders to accept non hmrc copies 924 17
- Professional Qualification 280 2
- Deferring taxable income until after 5 April 319 1
- Late Filing SA due to property income, individual was also a non dom for 15 years 190 11
- VAT margin scheme 155 11
- Auto-enrolment drivel 787 13
- We contribute a percentage of employees' salaries to a pension scheme set up by them - do we need to get involved in auto-enrolment? 221 3
- Company Dividends Received 167 2
- Is Corp tax payable on legacy received by bowls Club? 155 1
- Client information from previous accountant 484 8
- Question regarding A1 Form 180 1
- Possible Partnership? 530
- Lunatics in charge of the asylum - Bluestone 525
- Tax and accounting treatment on long lease granted from freehold 472
- New Fangled Penalties 329
- Clubs and Taxable Income 272
- Purchase of property freehold - capitalisation of costs 263
- Loans to other companies 207
- Closed PAYE schemes and auto enrolment 189
- Outsource Data Entry 158
- Lenovo – Superfish & Komodia – is your PC vulnerable 157