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Where Taxpayers and Advisers Meet

Write-off Shareholder Loans

Joined:Tue Aug 25, 2020 7:47 am
Write-off Shareholder Loans

Postby Surrey12 » Tue Aug 25, 2020 8:09 am

Company Consists Of:

Assets & Stock £1m
Loans to Shareholder A £3m

Shareholder A decides he will sell all his shares in the company to Shareholder B (who is already a shareholder too) for £1. In return Shareholder A gets £1.5m back of his loan he made but therefore loses £1.5m.

From the Company's perspective it has a £1.5m exceptional income being a loan received written-off.

The Company has losses brought forward of £1m pre 1 April 17 (normal trading losses) and £2m post 1 April 17 (normal trading losses).

Should the £1.5m exceptional income be allocated against the £2m post 1 April 17 losses as I understand that pre 1 April 17 losses can only be used for profits of the same trade while post 1 April 17 losses can be allocated to different types of profit?

Many thanks for any help you can give.

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