Partial loan write-off is an allowable loss

The taxpayer a former stockbroker made a loan to a company of which he was the sole shareholder and through which he conducted an interior design business.

The company made losses for several years and in January 2013 the taxpayer decided to write off part of the loan and wind down the business ensuring that all the creditors were paid to protect his reputation. It ceased trading in 2016.

The taxpayer claimed a loss for the written-off part of the loan under TCGA 1992 s 253.

HMRC refused so the taxpayer appealed.

The First-tier Tribunal said whether the loan to the company was irrecoverable was a question of fact. Further as a matter of law loans can be written off in part.

HMRC’s argument that the taxpayer thought there was a possibility that the balance of the loan would be repaid was...