Loan to a LLP

Loan to a LLP

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hi,

I have a tax payer who wants to contribute £1,000 to a LLP in exchange for nothing.

He doesn't want any stake/capital in the business, nor does he want the money repaid to him ever.

Dr cash £1,000

Cr Creditor £1,000

Does the loan get written off to the P&L? and what is the tax treatment?

I'm aware of s253 TCGA 1992 for the tax payer, but unaware of how the loan is treated in the accounts or it's tax treatment.

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Portia profile image
By Portia Nina Levin
18th Nov 2015 14:36

It does not sound very much like a loan to me.

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By craig preece
18th Nov 2015 19:02

Maybe I misunderstand

It sounds like you are looking for tax relief when somebody gives their mate a grand for no obvious reason?

You probably need to look a bit deeper into s253 (I cannot be bothered, and may be wrong, just suggesting you look at this) as I believe it does not apply where the loan was irrecoverable when made, as you have described, or if the only reason for the loan was to obtain tax relief, as it appears you are looking for. I'm aware of cryogenics but I couldn't build a chamber!

Agree with Portia, obviously, back to basics here, if no intention to ever repay how is it a loan in the first place?

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