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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am a property developer and in 2009 lent some money to a

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I am a property developer and in 2009 lent some money to a property development company ( I was a director of the company).This was to demolish a house and build a new one and to sell it at a profit. The loan was recorded as a directors loan.
I continued to trade a as self employed developer. The limited company above is now in administration and I will not get back my unsecured loan . I therefore have a capital loss.
Is there any way that I can offset this against my income tax bill?
Submitted: 10 months ago.
Category: Tax
Expert:  TonyTax replied 10 months ago.

Hi.

I'm afraid that you cannot claim income tax relief for your loss. As you will read here, all you can do with it is to claim relief against capital gains in the two years prior to your claim so long as it was irrecoverable then, the year of your claim or in in future tax years.

I hope this clarifies your position but let me know if you have any further questions.

Customer: replied 10 months ago.
As a self employed developer I maintained the property for two years. It was rented out at the time and the ltd company did it via a large estate agent they only paid the basic collection rate for this. I did not receive any payment for this so should I be able to claim this as a loss against my income?
Expert:  TonyTax replied 10 months ago.

I think you are asking if you can claim tax relief for the value of the time you spent maintaining the property which you received no payment for. I'm afraid that the answer is you cannot.

Customer: replied 10 months ago.
Even if I had a contract to do so for 7% of the rental income?
Expert:  TonyTax replied 10 months ago.

You might try claiming bad debt relief but unless you invoiced for the work, you may struggle to get it past HMRC. It's worth a try but you need to be clar in your tax return what the bad debt claim relates to as HMRC will almost certainly ask about it.

Expert:  TonyTax replied 10 months ago.

I have to go out for about 30 minutes but will be back.

Customer: replied 10 months ago.
Thanks Tony
Just to give you a few specifics .
John D Wood would usually charge 15% for a full maintenance contract.
I negotiated an 8 % collection only rate and I as a self employed contractor did the maintenance at 7% of the collected rent.
This is a very large house and very complicated the initial rent was £46,500 per month.
I have invoiced the company as we went , but have not received payment. The company is now in administration and I am told that even secured debtors will not get a return on all the investment.
I also have a directors loan in credit to about £850 k so I will clearly have a capital loss to carry forward.
Expert:  TonyTax replied 10 months ago.

As you invoiced for the maintenance feesand I assume accounted for those invoices in earlier accounts, you should claim bad debt relief in your latest self-employed accounts. Box 27 on page SEF2 of the full self-employment pages is the box you use for bad debts.

You should claim the capital loss in your tax return capital gains pages to establish it with HMRC.

Customer: replied 10 months ago.
Thanks for the advice regards
Nick
Expert:  TonyTax replied 10 months ago.

Thanks.

Would you mind rating my asnwer before you leaver the site please.

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15886
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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