New queries: 7 April 2022

Loan capital

Tax on losses incurred on transfer of shares.

I have a client who is UK resident and domiciled who formed a company in St Lucia putting in £10 of share capital. He then made a loan to the company of £3m. The company then purchased a property in St Lucia which he has used as a vacation home for quite a few years. The property in St Lucia was purchased with the £3m.

Our client now intends to sell the property and is expecting to receive only £2m for it. This means he will lose £1m of his loan capital. My suggestion to the client is that he subscribes for £3m worth of shares in the St Lucia company. The company will then send him the £2m and my client will then have a loss on his shares of £1m which presumably he could...