the scenario I have is as follows.
LLP with members account showing as £10000 Overdrawn by member A, (one member (A) extracted more funds than entitled to with the agreement of the other member(B)). Both members paid tax on their profit share ratio.
Now the LLP wants to close down - member B is happy to write off the balance overdrawn (as it is effectively from member B to the other). The LLP also has a loan which it has been agreed will be transferred to member B.
So upon closing - the loan would transfer to B increasing the amount owed to him. A would effectively be overdrawn but the net liabilities would be owed to B who would allow the closure of the LLP. Does that sound right or is there something that i am missing?
I read on another page as the member is overdrawn then this will create tax liabilities. Would that be as the excess drawn would be taxable on him personally rather than the profit share basis? Even though member B has been taxed on it? (the members are not related either).