Share Sale - Directors loan Write off - Ct liability
A new client is looking to buy an existing company - this company currently has trading losses.
The company has been funded by the existing shareholders and as part of the sale agreement these shareholders will write off their loans to the company. These are not insubstantial sums.
How will the loan write off be treated for CT purposes - will it be taxable as income from a loan relationship. As far as I am aware the loans to the company have been interest free.
If the write off is taxable as income from a loan relationship then presumably the company will not be able to ustilise its brought forward losses.
I would apprecaiet any comments regarding the above.
Thanks
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