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Tax relief on loan write off?

Companies not under the same control

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Can someone help me out with the following scenarios please to ensure I am correct?:


company A owns 60% of company B. B ceases to trade and has no assets, it owes £x which is a combination of loans from A to B to aid cash flow and some unpaid services provided from A to B.

tax implications -the write off of balances is dealt with as follows:

company A the write off of both balances does not attract any tax relief.

company B - the release of debts are not subject to corp tax.


the same as scenario 1 but A only holds 40% of B and the remaining shareholders are not connected with A at all.

inrespect of the write off of the trade debt and loan write off:

A. Trade debt results in a bad debt whereby CT relief Is available.

loan write off is added back and dealt with as a non trade deficit ( can this Be offset against trading income?)

Company B - both amounts would Be taxable (if applicable - which is unlikely as its insolvent)

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By johngroganjga
07th May 2017 21:42

Why is A releasing the debts? Don't you simplify everything enormously if it simply refrains from doing so?

Then you only have the write offs / impairments in A to ask about the tax deductibility of. You won't need to ask about the taxability of the releases in B, because there won't be any.

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By Jigs
08th May 2017 06:30

Yes fair point, it is the treatment in A that matters here, not sure if I am correct for each scenario in terms of the tax treatment?

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By Dick Stastey
08th May 2017 10:48

I agree with John. Why not ask a different question?

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