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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4348
Experience:  FCCA FCMA CGMA ACIS
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Hi There is currently a surplus in debtors in a limited

Customer Question

Hi
There is currently a surplus in debtors in a limited company which is in fact a loan owed by its subsidiary company and it is irrecoverable. If the loan is written off and there are no further items in the Balance Sheet, can the company be struck off and is there any tax payable.
Thanks
Paul
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello Paul, I'm Keith and happy to help you with your question.
Striking off is now a rather more labourious process than it used to be years ago when it was merely a matter of asking the Registrar of Companies to strike it off. The quickest and easiest method of disposing of a company is now to sell it as a going concern and you can even do this on eBay! The subsidiary company would have to be disposed of first and any gain made would also affect the Corporation Tax (CT) position.
If the debtor is written off as you suggest it will produce an element of loss in the Profit and Loss Account. This will in itself have a ripple effect within the CT account. Otherwise there are no tax implications save for the shareholders who may incur a Capital Gains Tax liability on any gain made on the sale of their shareholdings.
I do hope that I have given you an indication of how you could proceed to achieve your end of disposing of the holding company.