Loan Write Off and Utilising Losses

[satch7]

Hi

I have a group of companies and partnerships all controlled by the same persons.

The Limited Company is in the process of being wound up. We applied for ESC C16 to apply and the funds have now been distributed to the shareholders - leading to a capital gain.

In one of the partnerships, the partners wish to cease.

The nature of trade in all companies/partnerships is that of computer supplies/maintenance.

Within the balance sheet of the partnership is a loan to a building company of £230,000. This loan will not be repaid as the company has gone bust. The partnership was advised to loan the building company the £230,000 years ago in the hope that they would make a large profit (the building company was to build 500 new homes). The building company is not connected to either our limited companies or partnerships.

If this loan is written off it will create a loss in the partnership.

Can I offset this loss against the capital gain created by distribution (under ESC C16) in the Limited Company under Section 71 loss relief? Or, would it not be allowable as it would be deemed an investment loss as opposed to trading loss?

Thanks in anticipation.

Michelle