In the 2010/11 tax year, a director made a capital loss when a loan he had previously made to the company became irrecoverable.
In the same tax year, he also realised a greater capital gain through sale of unconnected assets.
He paid the capital gains tax on the gain but no relief was ever claimed for the loan.
Is there any possibility of now making a claim for the loss sustained on the loan and offsetting against the gain from 2010/11? Would an overpayment relief claim be accepted?
Replies (4)
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Loans are not (usually) capital
If the loss had been shares, then yes you have four years to make the claim. Shares are capital assets on which a negligible value claim can be made.
A director's loan is not capital and unless you can show otherwise, I suspect you can not claim a capital loss. I did have one a couple of years ago where the loan was convertible to equity. Client converted prior to insolvency (important). We claimed, HMRC argued, we won on the basis of an unbroken series of capital transactions (i think, or something like that).
No doubt the more technical bods will be along tomorrow.
I stand corrected
Timing wise I still think you have four years to make your claim. We missed some capital losses on a share portfolio and corrected it by sending details to HMRC making the claim and asking for client record to be updated. The reply was OK, done.