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Intercompany loan write off when company dissolved

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Hi

I have a UK based client who owns 100% of two companys: Companies A and company B.

During the course of the business, Company A paid funds to Company B in order to assist with running costs (not management fees, just a loan between companies).   During the course of this year, Company A was disolved by companies house (failure to provides accounts/CS01 etc.) Due to this, I am unsure of the journal entry required in company B to remove the creditor from the accounts.  Obviously this needs to be cleared from the balance sheet to the P&L but I am unsure what to write it off to?   

Just to clarify - there was no liquidation process, just a simple dissolution.

Any advice would be gratefully received.

Thanks 

Replies (9)

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By David Ex
22nd Feb 2022 20:46

CR P&L

DR I/Co creditor

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Replying to David Ex:
Flag of the Soviet Union
By thevaliant
22nd Feb 2022 22:48

Yup!
Income (taxable income most likely?) in the hands of company B.

However, IF there is a plan to restore Company A then doing nothing might also be acceptable on the assumption you do restore company A.

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Replying to thevaliant:
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By David Ex
22nd Feb 2022 23:05

thevaliant wrote:

Yup!

Years of training paying off!!

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JCACE
By jcace
23rd Feb 2022 08:38

Although surely the debt in the dissolved company is now bona vacantia and belongs to the Crown

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Replying to jcace:
paddle steamer
By DJKL
23rd Feb 2022 08:42

Yep, Liz when she recovers from Covid will be round with the boys to recover what she is due.

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Replying to jcace:
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By Paul Crowley
23rd Feb 2022 12:24

Agree
Debt owed is still owed

@OP
Cheaper to restore than to just pay tax on it

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Replying to Paul Crowley:
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By thevaliant
23rd Feb 2022 15:41

Obviously Paul, you are right (and therefore my original answer wrong) but in practice would anyone actually pay the Crown the liability?

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By I'msorryIhaven'taclue
24th Feb 2022 06:22

If Dissolved Co A's debtor is/was subrogated to the Crown then, in theory, surely Co B would not be in a position to write off that debt.

Not sure about how that might work in practice. Where's Paul... is he up yet?

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Replying to I'msorryIhaven'taclue:
JCACE
By jcace
24th Feb 2022 11:50

Agreed. As Company B owes money to Company A, to properly write off the loan Company A would need to have prepared a waiver of loan and delivered it to Company B.
I don't know whether in practice the BV Office would follow up on these kind of debts - a bit different to bank accounts of companies that have been struck off.

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