PTP Tax Tip No 39 - How to pay tax twice on the same money
Q. My client company is a 100% subsidiary of its parent and has a 31 December year end. The two companies have traded with each other and the subsidiary owes its parent £100,000 on trading account. There is no feasible chance of recovery and so the holding company wants to release the debt. The directors are aware that there will be a liability in the subsidiary on the released debt, but want assurance that there will be a deduction for the holding company on the bad debt. It's a manifestly commercially-driven decision; so surely there's no problem?