My father was sole director and sole shareholder of a UK limited company for the pub he ran when he died suddenly a few weeks ago. My brother and I were named executors and beneficiaries of his estate and would like to sell the company. My father had issued a directors loan to the company for some £270k when he initially bought the pub (some 12 years ago) and which has sat on the accounts as a liability ever since.
Given the liability is now to his estate (and by extension then my brother and I) I would imagine no one would want to buy the company with it still on the accounts, so we were planning on appointing ourselves as directors (once we legally can) and then forgiving the debt such that the company is sellable. Our concern though is that HMRC may see this as IHT avoidance as it would write off an asset from his personal estate therefore reducing its taxable value.
The company has little by way of tangible assets and the profits on the accounts show there is no realistic prospect of the loan being paid off as a result of ongoing trading, but given its reputation/brand etc we believe there is some goodwill value to be crystalised for the estate and therefore want to avoid simply winding up the company if we can (although I concede this would be far more straightforward). Given the debt has no chance of being repaid and had it been to a 3rd party we would simply write down the value as part of the estate valuation but again I don't know if we can do that given we are both creditor and debtor.
I feel like we're caught between a rock and a hard place as we can't sell the company with the loan still on the books but equally we don't want to be doing aything to attract the ire of HMRC - does anyone have any advice on our position here?