Scenario is as follows:
Company A is owned 100% by Mr A
Company B is owned by various parties, but Mr A Owns 35%
Company A owes company B £50k and it has been agreed by all shareholders of Company B to write off the debt. The debt is a loan and not related to any trading activities between the two entities.
The two companies are connected but not in a group, what are the tax implications of the above transaction in terms of the loan write off in each entity. Does Company A pay corp tax on the release of debt and can Company B obtain tax relief on the write off?