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I have a corporate client which ran into difficulty some years ago and at that time it had a large outstanding liability to a director/participator who had advanced over £100 000 to the company to try and keep it afloat.
Subsequently the company which was basically insolvent was taken over by a third party. The third party has succeeded in turning the company fortunes around. By agreement with the previous creditor participator this outstanding loan account is now going to be waived.
Would the waiver of this loan account give rise to any tax charge on the company that received the advance of the funds and would any tax relief be available to the original creditor?
Readers’ thoughts would be appreciated.
Query 19 725 – Jack.
An exchange of the loan for shares might have been better.
From the company’s point of view what we have...
