Capital losses

FAS
FAS Registered Posts: 2 New contributor 🐸
I have a client who leant money to a private limited company. The company subsequently went in to liquidation with no chance of recovery of any debts.

Does anyone know if the outstanding loan can be set off against other income or does it have to be carried forward until a capital gain is made?

The IR seem to change their minds on this by the hour. Some say it can be set off others say it can only be set off against gains.

IR296 states you can make a claim but does not specify against other income.

Any help would be gratefully received.

Comments

  • Dean
    Dean Registered Posts: 646
    What do you mean by 'leant money'?

    I think the very nature of your question would boil down to this. My gut reaction is that there will be no relief at all!

    Regards

    Dean
  • peugeot
    peugeot Registered Posts: 624
    I would tend to agree with Dean here.

    If someone lends money to a company whether it be an officer (director) of the company or a third party and the company subsequently fails, then there isn't generally any relief available.

    An exception to the rule would be where a third party/officer gave money to the company in exchange for a share subscription, and this is demonstrable, but generally other than that there isn't much in the way of relief.

    Regards
    Steve
  • FAS
    FAS Registered Posts: 2 New contributor 🐸
    Dean wrote: »
    What do you mean by 'leant money'?

    I think the very nature of your question would boil down to this. My gut reaction is that there will be no relief at all!

    Regards

    Dean

    It was an official loan which would classify as a loan to a trader that the IR notes say would be an allowable loss but they just don't clarify if it is allowable against other income.

    Thanks for your thoughts though.
  • Dean
    Dean Registered Posts: 646
    Presumably you have read the following:

    http://www.hmrc.gov.uk/manuals/cg4manual/cg65930+.htm

    If the loan does meet the qualifying conditions, then you could off-set the allowable amount against other gains made in the year or carry them forward.

    Regards

    Dean
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