Intercompany loan write offs

[BoPeepsSheep]

DH and I own two limited companies. We are proposing that I will remove myself from company A and operate only company B.

I currently have the majority share in each.

We have some funds in company A which we don’t really want to distribute as a dividend, but could be put to good use by company B in paying down the mortgage on a property it owns.

I know that we can make an intercompany loan, and I understand that the loan can later be written off on the basis of being tax neutral because both companies are connected and have the same controlling shareholder - me.

What is less clear is, can the loan to company B still be written off once I have resigned from company A? At the point the loan was written off, the two companies would no longer have the same controlling officer.

Would it be better (and legal) to write off the loan whilst I am still a director of company A, and thus whilst the write off is tax neutral?

can we literally make the loan and write it off in the same week, for example?

thanks to anyone with the patience to get this far!

Director and shareholder are completely different roles. Are you remaining the majority shareholder after you resign as a director? Then you still have control.

Sorry yes, didn’t clarify.

I was planning to remove myself as both, as being in control of company A is affecting the rate at which company B pays corporation tax.

Alternatively, perhaps it’s possible to gift some shares to my husband, making him the majority shareholder? It’s currently 75/25 in favour of me.

However, this would also mean that the loan would potentially be written off with me no longer being the controlling shareholder, which I’m concerned wouldn’t count as ‘tax neutral.’

If you come on here to get advice about something as important as this you really need to rethink your entire strategy.

Why not go to a (suitable) solicitor rather than ask here? Quite apart from getting proper advice from a professional who, presumably, will have all the facts, you will be paying for advice from a source that carries professional indemnity.

not sure you need a solicitor - corporate tax accountant is possibly more useful.

Tbf, not many solicitors offices were open at the time the OP posted Assuming she's in the UK of course. Maybe she was just mulling things over and wondered if anyone had some insight/experience of similar before getting legal advice.

Fair. And they also (should) know what they’re doing and carry professional indemnity.

People often mull things over on mumsnet. That’s kind of the point!

I was asking if anyone had insight. We will of course eventually speak to our accountant, but our tax affairs are very complicated and we need to know whether there are legal or tax implications of writing a loan off.

I don’t think that people mulling things over on mumsnet need to rethink their entire strategy - bit OTT!

You need to speak to a professional not speak to randoms on the internet

Yes I do know that. And I will.

some randoms on the internet are actually qualified professionals who get into conversation and give useful pointers or advice while you’re at the ‘mulling over’ stage.

Thanks for yours.

The useful pointer is to speak to trusted professionals.