Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration
Home Saved articles Viewed items Login Contact Free Trial
|

Loan write off

© Copyright LexisNexis 2024. All rights reserved.

06 July 2006
Issue: 4065 / Categories: Forum & Feedback
My clients are Crouch Ltd which is owned 50/50 by Mum and Dad and Shrek Ltd which is owned in the ratio of 30/30/20/20 by Mum, Dad, Son and Daughter. Crouch Ltd made a loan of £50,000 to Shrek Ltd, which it now wishes to 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...

If you or your firm subscribes to Taxation.co.uk, please click the login box below:

If you are not a subscriber but are a registered user or have a free trial, please enter your details in the following boxes:

Subscribe Now...

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this item in full.

Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.

READERS' FORUM premium icon
Read All
Readers forum: Claiming pre-registration input tax Practice tip: 19 December 2024 New Queries: 19 December 2024 Readers’ forum: Should I advise my client to declare income? Readers’ forum: Pension scheme set up as discretionary trust?
FIVE WAYS TO MAKE ACCOUNTS PRODUCTION AND TAX EASIER.
Download the exclusive Xero
free report here.

New queries
Please email any questions you might have
to: taxation@lexisnexis.co.uk.

NEWS premium icon
Read All
Automated tracking system for taxpayers could save £36m a year, study shows Welsh income tax rates are unchanged Business expenditure on R&D rises in 2023 HMRC targets landlords who may have undeclared rents Lump sums cannot be returned to pension scheme
DEADLINE DATES
CASES premium icon
Read All
No extenuating circumstances to extend deadline Delay in issuing penalties was no excuse for late return Sales of occupation income avoidance rules apply Whole of settlement was not subject to tax Payments were taxable as earnings
MOST POPULAR
Readers forum: Claiming pre-registration input tax No extenuating circumstances to extend deadline This week's opinion: 19 December 2024 Automated tracking system for taxpayers could save £36m a year, study shows Welsh income tax rates are unchanged
Copyright © 2024 LexisNexis
back to top icon