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.
- The stupidity continues 621 23
- transactions after account have been closed 171 4
- Can I claim Vat on solicitors invoices? 168 5
- CIMA at the age of 35?? 535 10
- Offsetting CT losses against another company 223 6
- Calculating capital gains tax for non-residents UK residential property 126 1
- CIS. Why is it so complicated? 2,340 25
- New Employers Helpline 210 4
- Limited company director - other earnings in the tax year 223 3
- Software recommendations 277 1
- Share transfer question 378 17
- Land Rover Discovery 3.0 SDV6 255 Comm Auto 2 seat 330 7
- qualifying for 1/9th tax credit on foreign dividend 186 2
- HMRC & daft penalty 2,457 19
- Overlap relief 759 19
- What is IRIS World like? 368 8
- Pension contributions 383 10
- Do you have to declare business expenditure on a personal credit card on your P11D? 512 11
- Do you use sign up lists on your website 211 1
- Setting up PAYE scheme without UTR 287 8
- Has anyone been affected by the RBS payment breakdown? 439
- Straight line write off of Purchase Goodwill ??? 435
- WIP Software 301
- FRS 102 compliant illustrative accounts for an insurance company 291
- No payroll scheme in place 235
- CGT, PPR and transfer of equity to spouse. 232
- Do subcontractors on work for residential (student accomodation) construction 210
- Is there anything wrong with this? 205
- Small Part Disposal of Property 190
- Uncommercial property business 182