Loan write-off

An industrial and provident society which is within the charge to corporation tax had loans made to it to enable it to buy premises which were run as a village shop.

The loans were in the form of unsecured loan notes and did not carry interest and this particular loan for £10 000 was made in 1995.

The premises are now leased to a third party and rent is generated.

One of the original lenders has died and the executors and beneficiaries of the estate have agreed that the loan should be written off and a letter to that effect has been received from the solicitors acting on their behalf.

Is the write-off of the loan within the non-trading loan relationship rules and therefore taxable on the society?

Query 17 700 – Shopper

Reply from Thicket

I fear that the answer is that yes the loan...