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Thank you for getting back to me.
The loan consists of £20k as a cash injection for the company, and the remaining balance being unpaid directors salaries, expenses paid by private funds etc.
I guess I can understand the latter attracting CT, as these expenses had previously been deducted in working put profits chargeable to CT, but I'm just finding it difficult to understand why the £20k will also attract CT as it was a loan and not relating to previous company expenses.
By taking the loan a liability item would be created in the balance sheet. By paying off the loan in cash this indebtedness would disappear, but by writing off the loan the company's position would be enhanced hence the CT liability. Pay it back, no problem, but write it off and you expose the company to a greater element of CT.
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