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Readers’ forum: Genuine error

21 July 2020
Issue: 4753 / Categories: Forum & Feedback
Application of CTA 2010, s 459 in respect of an inter-company loan.

Genuine error

I have a client Mr E who 100% owns two companies X Ltd and Y Ltd both of which have a year-end of 30 June. Mr E had a credit balance of £1.25m in X Ltd at 30 June 2019 and during the year to 30 June 2020 he needed to draw £0.25m towards the purchase of investment property.

The intention was that this money should be drawn from X Ltd but Mr E drew the money from Y Ltd in error. As a consequence of this error Mr E still has a £1.25m credit balance with X Ltd but is now overdrawn by £0.25m in Y Ltd.

Because this was a genuine error our inclination is to:

  • process book entries that will reduce Mr E’s credit balance in X Ltd by £0.25m; and ...

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