Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

Timing of release of debt under liquidation agreement

12 April 2023
Issue: 4884 / Categories: Tax cases
S and D England (TC8770)

The taxpayers were the directors of a company which provided car finance to the motor trade. In 2012 it was placed into creditors’ voluntary liquidation. In October 2013 the taxpayers agreed with the liquidator that they would pay £100 000 by instalments over two years to settle their debt to the company of about £1m. Failure to make any of the instalments would result in the whole of the debt becoming due and payable immediately.

A dispute arose as to when the debt was written off. HMRC said this happened in 2013-14 because the agreement constituted the release of £900 000 of the debt and triggered a charge to tax under ITTOIA 2005 s 415. The taxpayers accepted there was a taxable release but said because the release was conditional on paying the instalments it would only take place when the condition was satisfied which...

If you or your firm subscribes to Taxation.co.uk, please click the login box below:

If you are not a subscriber but are a registered user or have a free trial, please enter your details in the following boxes:

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this item in full.

Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.

back to top icon