Loan write off

Assuming that Mum and Dad have no special rights conferred in the articles of Shrek Ltd it appears that for accounting periods starting from 1 October 2002 the companies will no longer be connected as the control test is now found in FA 1996 s 87A(1) (as adopted from
TA 1988 s 840) rather than the wider TA 1988 s 416. This would certainly be the case if Mum and Dad did not have an interest in Shrek Ltd (before 1 October 2002 the companies would be connected as holdings of associates are attributed).
Therefore is there an allowable debit in Crouch Ltd and taxable credit in Shrek Ltd?
Taxation readers' views advice and comments would be very welcome.
Query T16 839 — Bex.

Reply by Thicket:

FA 2002 introduced significant changes to the loan relationship rules as these apply to...