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How is a loan between father and son companies treated for corporation tax?
Patrick controls 89% of the shares in P Ltd and his son Adam controls 100% of shares in A Ltd. P Ltd has lent £150 000 to A Ltd and the amount is shown in the accounts of both businesses as a loan to and from an associated company.
Both P Ltd and A Ltd are property investment companies operating from the same business premises and Patrick strongly influences Adam’s choice of property investment.
Both parties intend that the associated company loan is written off in a way that there would be no tax benefit or liability under CTA 2009 s 358 and s 354.
A Ltd is considered to be financially dependent on support provided by P Ltd and I should be grateful to learn from Taxation readers whether these companies would be considered to be connected under CTA 2009.
Query 18 846– Fatherly
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