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CT implication on loan write off between companies

CT implication on loan write off between companies

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Good morning

Company A lent some money to another unconnected company (Company B) few years ago. 

Company A has now been acquired by a couple jointly owning 100% of the share capital. The wife is also 80% shareholder of the Company B. The creditor company do not have resources to repay the money borrowed and the shareholders of both the companies have agreed to write this off.

I understand the general rule is that where the debtor and creditor in a loan relationship are connected in any part of an accounting period and the whole or part of a loan is written off, then this is effectively a ‘tax nothing’. I just want to confirm if the above transaction will meet this requirement. The wife clearly controls Company B but controls 50% of Company A.


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By Wilson Philips
31st Jan 2020 09:38

If the wife does not control A, as defined for loan relationship purposes, the “tax nothing” treatment will not apply.

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By ms998
31st Jan 2020 11:59

Following resources may help

s348 CTA 2009
s466 CTA 2009

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