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ODLA settled with liquidator - tax liability

Client will reach a settlement with the Liquidator in regards to ODLA - no tax due therefore on ODLA

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Disputed ODLA - client will settle with the liquidator - if his tax liability is cleared .. I have been told that is - clarification please.

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By Anonymous.
15th Jul 2020 11:07

Might be helpful if you could provide some details organised in complete sentences.

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Replying to Anonymous.:
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By Tangy
15th Jul 2020 11:18

Apologies, first time.
ODLA 50k from 2013/14 - this was written of by the company in 2015. Company went into Liquidation in 2018 and is now disputed by the liquidator. He will agree a settlement, but does this extinguish the tax liability on the ODLA - tax is due on the ODLA. Basically if there is a 25k tax liability on the ODLA will this have to be paid if the Liquidator accepts a settlement on the ODLA. Apologies again if confusing.

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Replying to Tangy:
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By Anonymous.
15th Jul 2020 11:36

What was the dispute?

Are you saying that effectively the 2015 write-off is partly reversed so it's treated as if there was an amount outstanding from 2015 to now?

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Replying to Anonymous.:
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By Tangy
15th Jul 2020 11:42

Thanks for the reply,
Effectively the Liquidator is saying the waiver should be reversed because there was no P11D produced or evidence of the tax being paid. The directors will agree a settlement in relation to the DLA but want certainty that the unpaid tax will not required to be paid i.e. on top of the agreed settlement.

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By CS777
15th Jul 2020 11:19

Quote:

Disputed ODLA - client will settle with the liquidator - if his tax liability is cleared .. I have been told that is - clarification please.

Sift's ideal member.

Cannot string a sentence together. Clearly cannot be bothered typing. No detail. Freeloader.

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Replying to CS777:
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By Tangy
15th Jul 2020 11:26

Thanks for your kind words, very helpful.

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By johngroganjga
15th Jul 2020 11:25

You mean that an individual paid tax on a loan waiver, the validity of which is now challenged by the liquidator and is now agreed to be set aside?

Or has he not yet paid the tax? If so, how is that given that you say the waiver was executed in 2015?

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Replying to johngroganjga:
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By Tangy
15th Jul 2020 11:32

Many thanks for your reply,
The director had left the company prior to the waiver being executed. He had insufficient funds to pay the tax liability at that time. The tax was still due when the company went into liquidation. The liquidator is arguing the waiver was not correctly executed and therefore the DLA must be repaid. He has agreed a settlement figure for the DLA. Does this extinguish the tax liability since the DLA has effectively been repaid by the director. ?

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Replying to Tangy:
By johngroganjga
15th Jul 2020 11:41

How can he afford to repay the DLA but not the tax?

Are HMRC not all over him like a rash for not having paid his 2014/15 or 2015/16 tax liability? If not, why not?

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Replying to johngroganjga:
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By Tangy
15th Jul 2020 11:45

The amount of tax due is similar to the settlement figure for the DLA. If the director settles will he have to pay the tax also. HMRC are pretty much the only creditor and are fully aware of the DLA.

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Replying to Tangy:
By johngroganjga
15th Jul 2020 12:04

Well he’ll certainly have to pay tax on the part of the loan that he does not repay.

You say HMRC are the only creditor - you mean of the company or him?

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Replying to johngroganjga:
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By Tangy
15th Jul 2020 12:19

The company, HMRC are approx. 95% of the Creditor amount.
Thanks for your reply, as I understand your comment.

DLA 50k - settlement 30k - tax still due on the 20k.

Thanks again.

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Replying to Tangy:
By johngroganjga
15th Jul 2020 12:40

I would not count on HMRC reducing the tax liability unless someone runs it past them first.

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By Tim Vane
15th Jul 2020 11:29

probs 2 late 2 reclaim tax pd on waiver unless special relief claimed;unlikely to be accepted by hmrc;move on

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