Write off of intercompany loans tax
Are you sure though? If you adopt that treatment, then it seems very unlikely it will be challenged by HMRC since it is tax neutral - and it's what the legislation aims to achieve. So, you're suggesting that S can take a CT deduction for interest write off of intercompany loans tax trading items that are financed by way of debt to P.
That debt can then be released without tax consequence and it's tax neutral? There is nothing within the relevant non-lending relationship provisions that stops S.
ACCA The situation, however, becomes more complicated where the parties are connected. Debtor relationships A company will have a trading loan relationship, as a borrower, if it entered into the loan relationship because of its trade. Hope someone can help - the HMRC guidelines are not particularly clear! Legal Notices Visit the new cpajournal. Will the loan write-off cause problems in this regard? If they do, the companies are connected.
My reading is that where the loan relationships legislation doesn't tax the release eg inhercompany the parties are connectedS. So why's it still there?
I have to confess though, I'm not entirely sure, which is why I only say that the effect of S. The amounts involved might make it a non-consideration. I still read the legislation as being capable of taxing it in these circumstances though, and one has to be mindful that HMRC often feel free interco,pany ignore their own guidance. I still don't understand why S.