tax implications if creditor is dissolved

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Hi everyone,

Please advise. My company has a loan debt in front of another private company. Recently this lender company has been dissolved. In that case, what would be tax implications for my company?

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By DJKL
11th Apr 2018 12:16

If your company owed money to another company, as I think you are saying, and that other company holding such an asset has been dissolved without distributing said assets in specie to its shareholders, or realising it for its creditors, then the sum your company owed to the other company you now owe to Her Majesty.

Re tax consequences of any debt forgiveness/write off suspect that depends on relationships/connections between the two companies.

If a reasonable sum then some paid for advice would likely be advisable.

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By mrme89
11th Apr 2018 12:21

I'm sure that your accountant will help deal with both the accounting and tax treatment of this.

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By timothyvogel
11th Apr 2018 14:53

If the debt is "forgiven" then this is effectively an income. we had a client in this situation and tax man provided the legislation that said it should be treated as taxable. I.e. it is taxable in the same as a discount on a purchase would have to be treated, - a reduction in the expense, so an increase in the profit

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By bernard michael
11th Apr 2018 16:01

Don't write the debt back immediately because the company may be restored

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By Vkorn
16th Apr 2018 12:37

Thank you for your answers!

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