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.
- Capital Allowance on Vehicles - CT600 293 7
- Has Microsoft taken a huge bite out of Apple 1,343 25
- HMRC enquiry - PAYE error / RTI 195 2
- AML reporting to NCA 35 1
- Accounting for display stands 35 1
- VAT on new build property 259 5
- Who gets the CGT deduction 93 1
- Winning clients from retiring accountant - ethics/morals 1,773 15
- How much do you charge for Accountant's Reference? 2,385 24
- Introduction of assets to Limited Company (Comic Books) 547 16
- Outsourcing 75 1
- Is it any of my business ? 1,270 13
- Goodwill on incorporation 163 1
- HMRC - Online services - Anyone else having problems ? 178 2
- Seeking advice: Do you pay tax on donations if you are not a registered charity? 395 5
- VAT Flat Rate Scheme 180 1
- Insurance provider not VAT registered so Out of Scope ? 313 9
- . 284 4
- 31st october deadline 314 5
- Ltd Co / Summer House 236 1
- NHS finance professionals 692
- Auto Enrolment and Foreign employers 423
- Foreign Pension Contribution 391
- vat gross profit percentage margins 381
- Employee's statement of sickness (SC2) form - no longer available as downloadable pdf 377
- Pre Season Invoice dated September how do you treat the VAT as not due until May 16 371
- SWAT AML v Anti Money Laundering Compliance Plus (AMLCP) 324
- Does pension term assurance count for unused relief purposes? 295
- Management reporting dashboards and cloud accounting 262
- IFA income recognition & reporting 219