Inter-company debt on sale
Company A and Company B are owned by the same person, who is also the sole director of both companies.
Company A is a trading company, company B owns the building that company A trades from and also owns the copyright to the products company A owns. It also pays a salary and dividends to the owner - company A does not pay the owner.
Apart from rent, company B has never made any charge for royalties or management charge to company A.
The owner now wishes to retire to Crete and wishes to sell company A, but retain company B, although as part of the sale he would transfer the copyright to company A and then company B would simply rent the building to company A.
Over the years, company A has transferred money to company B such that company B owes company A approximately £450K but has only £200K cash and negligible distributable reserves. As part of any sale agreement the owner would like this £450K written off.
What would be the best way to write this off to prevent any adverse effect on company A, which will continue to trade under new ownership?
- Accountant won't release working papers 2,459 43
- Client tied in to accountant. Unfair contract? 405 9
- Furnished Lettings - expenses normally bourne by tenant 374 8
- Company formation and bank account 105 4
- Importing Sage Data and Year End 146 2
- Legal structure of a group of friends producing a free newspaper 378 8
- OneNote is fantastic 411 11
- VAT Direct Debit 331 7
- S445 tax V's new dividend tax 410 8
- Self Assessment Software 666 21
- Share capital - death of a shareholder 424 13
- Self-assessment statistics 2,333 55
- Director started half way through the year no previous income. Pro rate NI 202 11
- Owning overseas property 196 1
- Fees to charge for Auto enrolment Pension for small Employers 307 3
- What's happened to Smith's Taxation 270 1
- Expedia say that they can't give me a VAT invoice 678 13
- Auto enrolment confusion 1,139 21
- PPR on a development? 236 4
- PAYE – Directors NI 409 7
- Self employed and HMRC Worldwide Subsistence Rates 644
- VAT on Export Outside EU and Conditional Sale 398
- Acrobat Checkbox Help for New 64-8 395
- Property letting & CAs 385
- Interest paid - do new rules affect Tax Credits? 379
- 2015 tax year end 379
- FCA regulated company in a small group 337
- Self employed consultant working in Ireland 237
- MLR and benefitting from the disclosure 232
- Market Invoice (P2P invoice discounting) tax treatment 229