Company Loan

acsacsacs Registered Posts: 43 Regular contributor ⭐
I am preparing accounts for a limited company and they had received a payment from another company for around £10,000 it was effectively a loan. This was about 18 months ago and since then there has been no other transactions and looking to tidy up the accounts by writing this off.

How do I go about writing of the debt thats owed to that company? Is this deemed additional income which then needs to be taxed?

Any help much appreciated.


  • Anne Boleyn
    Anne Boleyn Registered Posts: 196 Dedicated contributor 🦉


    This isn't an area that I'm an expert on but I think you'll need to provide a little more information. Questions that come to mind are:

    Was there a loan agreement?

    What was the loan used for?

    Are the companies related?

    Is the other company happy for non-repayment?

    Hopefully others more knowledgeable than me will jump in and advise.

  • acsacsacs
    acsacsacs Registered Posts: 43 Regular contributor ⭐
    Hi Anne, thanks for your quick response!

    There was no loan agreement and the money has just been used in the business to finance itself.

    I have obviously not had dealings with the other company but have been informed by the client that the money will not be paid back.

    I am not sure if the two companies are linked either.

    Have spoke to the technical helpline and they have told me that it would probably be taxable as Operating Income? So presume this is where it should be writen off to and taxed to? Not sure whether there should be a disclosure as well.
  • groundy
    groundy Registered Posts: 495 Dedicated contributor 🦉
    You need to ascertain if the companies are related or associated in any way for the correct disclosure.
  • acsacsacs
    acsacsacs Registered Posts: 43 Regular contributor ⭐
    Right ok, no worries so if the companies aren't related ie there is no disclosure just a write off and operating income ie, taxed


    If they are related, ie;- related director etc. then this needs to be disclosed?
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