Owner-Managed Businesses

Owner-Managed Businesses Guidance

Produced by a Tolley Owner-Managed Businesses expert

Business tax Accelerate Corporation Ltd v HMRC

This case discusses the timing of relief for bad debts. It highlights the uncertainty about whether debts have gone bad and the relevant dates. While it does not introduce new principles, it provides a clear summary of debt write-off laws, serving as a useful reminder of the basic principles.

An interesting point arises regarding tax and insolvency. If a loan to a participator (e.g., a shareholder) is written off, the released amount is treated as income for the participator.

In this case, the taxpayer's company was liquidated. The taxpayer's loan account was overdrawn by approximately £400K, but he agreed with the liquidator to make a payment of £57K. The company was dissolved with the remaining balance unpaid, and the liquidator stated no further funds were expected in this respect.

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