Achieving closure

Mr A and Mrs A own a profit-making company B Ltd which supplies Mr A’s services as a consultant. Mrs A also works in the business and Mr and Mrs A own the shares in an 80:20 split. Mr A also owns 100% of C Ltd which has been carrying on a separate trade for the past three years.

Unfortunately this has not been a success and £30 000 of losses have arisen to date at about £10 000 per year. This has been funded by a loan from B Ltd to C Ltd.

Mr A had hoped to get an investor on board in C Ltd and it was thought that the losses might make the investment more attractive (because it would be longer until any tax became payable).

However Mr A now realises that this...