Trade Co is owned by Mr A and his 2 children, B and C - 50:25:25. Mr A has taken loans out of the company of £500k. s455 has been paid.
Mr A dies. His estate is made up purely of his shares in Trade Co (worth £1m). The loan to Trade Co is the only liability. B and C are entitled to the residue of his estate 50:50.
B and C, who are directors, write off the loan after their father passes.
s455 will be repayable to the company.
The estate will be subject to tax on the write off under ITTOIA 2005 Part 5 Chapter 6 - s664(2)(d) in particular.
When the estate is wound up, and the residue (i.e. shares in Trade Co) passed to B and C, will the £500k be taxable on them as beneficiaries?
My initial take on it is they will be but happy to be convinced otherwise.