Readers’ forum: What are the consequences of a write-down?

My client’s close company made a loan of £500 000 to a company owned by his daughter and son-in-law to finance a business in Slovakia secured against the value of the land that the Slovakian company bought with the money. The business has not prospered and although some of the money will be recoverable based on the security my client considers that the impairment in the loan should be recognised in the accounts for the year to March 2025 in which his company will have a substantial trading profit.

What are the consequences of the write-down? I presume there is no relief against the trading profit but might there be a tax charge on what is effectively an indirect gift to a connected person?

Query 20 497 – Worried.

The applicable rules will depend on whether the companies are connected.

Worried describes an inter-company...