Anonymous
Share this content
0
611

Tax treatment of a loan write-off

The client has gone bankrupt having lent a substantial sum to a company.

The company has no assets with which to repay the loan. The trustees in bankrupcy propose settling at a significant discount rather than putting the company into liquidation and getting even less. What is the tax treatment of the loan write off in the company, which is effectively a credit to reserves? Would the individual be able to declare a capital loss?

Thanks

Replies

Please login or register to join the discussion.

By Ruddles
16th Oct 2018 23:12

Taxable in the company.

There are more tax-efficient solutions.

Whether the individual would be entitled to loss relief would depend on the information missing from the OP (and whether alternative options were taken)

Thanks (0)
avatar
By papafur
to Ruddles
18th Oct 2018 12:58

Thanks for the steer.

Thanks (0)
avatar
17th Oct 2018 10:08

Surely the loan balance not repaid can be converted to worthless deferred shares so there is no CT?

Thanks (0)
By Ruddles
to Justin Bryant
17th Oct 2018 10:37

That would be one of my more tax-efficient solutions.

Thanks (0)
Share this content