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Loan release - tax position

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Company A and B are not part of a group but the shares are owned 50:50 by H&W.  A had lent B money but it has been agreed that B will be released from its obligation to repay A. 

A will recognised the debit and B will recognise the revenue in the respective accounts.  What is the tax position for both?

 

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Portia profile image
By Portia Nina Levin
01st Dec 2017 14:23

Well, it depends on whether or not they are considered to have a connected companies relationship, doesn't it?

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By blok
01st Dec 2017 15:03

you're right. it does depend on that.

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Portia profile image
By Portia Nina Levin
01st Dec 2017 15:10

HMRC have usefully answered that question in their manuals:
https://www.gov.uk/hmrc-internal-manuals/corporate-finance-manual/cfm35120
It could be implied by the relationship between the parties. Obviously, it might not.

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By Portia Nina Levin
01st Dec 2017 15:24

I think you knew all that though.

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