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31 March 2009
Issue: 4200 / Categories: Forum & Feedback , Income Tax
Three shareholders and directors have loaned money to a company that has ceased to trade and has no funds. They are considering another business venture. Should the new business be carried on by the old company?

I wonder if readers can help clarify my thoughts with what I believe is a simple issue but where I keep wondering if I am overlooking something.

My three clients were the directors and shareholders of a limited company. Unfortunately it was not very successful: it traded for three years and made losses in each year.

Eventually the bank decided that it had had enough and the clients were compelled to introduce money from their own resources into the company which then repaid the bank and other debtors. The company has now ceased trading.

Undeterred the three clients now have another business idea that they wish to pursue and we have discussed this and the setting up of a new limited company.

I have subsequently started to wonder why the new business should not be carried on by the existing company.

I appreciate that the...

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