Nick Wright examines the tax treatment of loans between connected companies, including the definition of control, the loan relationship rules and interaction with the close company provisions, focusing in particular on loan impairments and releases, and the circumstances in which a write-off may constitute a distribution.
The tax treatment of inter-company loans sits within the loan relationships regime in CTA 2009, Pt 5. A company has a loan relationship wherever it stands as creditor or debtor in respect of a money debt arising from a transaction for the lending of money (CTA 2009, s 302) and this concept is deliberately broad. It captures bank loans, bonds, debentures and, critically for present purposes, inter-company loans.
All amounts arising from a loan relationship are brought into account as income for corporation tax purposes. This means that impairments, releases and
