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?
- Care to help a student out? 72 3
- Flat Rate Scheme 57 3
- ICAEW student, Dilema with client & boss 1,831 28
- Writing off bad debts 76 2
- Starting an accountancy practice for bachelors? 465 6
- Excel - protecting a cell 74 3
- Dazed & confused 1,139 7
- Giving a seminar 391 21
- Playstation 4 - Allowable expense or not? 2,911 61
- Website - Should I upgrade? 234 7
- Debiting private use proportion to directors loan account 357 15
- Is there a legal obligation for the Inspector to hand over minutes of a meeting 224 3
- Property scam victim 463 12
- General legal fees 135 3
- Entries on SATR for Non Dom with unremitted income < £2k 124 6
- Allowable charity donation? 113 2
- New HMRC phone answering method ... 749 10
- Contra entry in Sage Line 50 accounts professional 66 2
- Capital Gains on Inherited Property 418 16
- Ltd co client preparing own self assessment tax returns 1,168 10
- Desperately seeking Susan, Sam or anyone with any other name 1,158
- Experience with Islamic investor following Sharia-compliant rules? 593
- Darwinpay Partnership Assessment 398
- S464A Charge to tax: conferring benefit & BIK 301
- Interest on Loan to a Company 201
- Bank interest in 'near' facility recall situation 182
- Agent fees to sell business 180
- Alphabet shares 177
- ACCA continuity of practice arrangement needed 166
- Residency 91 day rule 159