An UK based LTD company has opened a ''branch'' in Hungary. Its director has 100% of the shares.
The Hungarian entity has been registered as a branch according to their incorporation documents. The shareholding is however 99% the director of the UK company and 1% a Hungarian national.
The Hungarian branch has made losses and they have decided to close it. The UK company has lent money to the Hungarian branch (about 23k GBP) .
I have researched to see if it would be possible to transfer those losses against the profits of the UK company. We are aware that the losses of a branch can be transferred to the mother company but in this case i am not sure whether the shareholding of the Hungarian company makes a difference or not.
I have come across CTM 81505 in the HMRC internal manual which says the main shareholder should have been the UK company instead. I am not sure if it applies or not.