Adrian Lawrence is an experienced Chartered Accountant. His interests include ICT and Offshore Taxation Planning.
He has held senior positions in the private sector including Group Director of Finance in IT, Business Services and the Transport Sector and Cabinet Positions in Local Government.
The £50K isn't injected in at this point, but you are correct, its not going to have any value as it ceased trading and the net assets are (£50,000)
What are the criteria for an allowable capital loss, the Director does plan to sell his shares in the larger company in the next 3 years so it can certainly be used against that.
Trading losses, plus a management charge from a related company.
There are no dividends paid in the current year and no overdrawn loan accounts.
Whilst it is insolvent the Director doesn't want to leave the debts unpaid, the issue is how to best clear them off in the most helpful way.
The Directors Loan balance could for example be converted to shares.
The Ideal solution would be a negligible value claim for a loss and using that against the personal tax bill - they have very significant dividend income from another business of £500K+
They own 100% of this smaller company and 25% of the larger one, so its not an option to make charges up to the larger one.
My concern is if we only had a single company, then the transaction would be Dr Fixed Asset and Cr Revaluation reserve
By "moving" the asset in this way we are recognising what would otherwise be a revaluation through the P&L. Both subsidiaries are 100% owned by the same parent.
I agree on the consolidated position, its the presentation in the subsidiaries that concerns me.
There are plenty of hacking/cracking programs easily available on the internet which allows their users to read the password and hence break into files. These sorts of password are useful to prevent the casual reader from opening, but unfortunately are very easy to overcome.
To be more secure there are encryptions programs such as PGP key based ones, these are very much harder to break but potentially breakable also..
My answers
The £50K isn't injected in at this point, but you are correct, its not going to have any value as it ceased trading and the net assets are (£50,000)
What are the criteria for an allowable capital loss, the Director does plan to sell his shares in the larger company in the next 3 years so it can certainly be used against that.
Trading losses, plus a management charge from a related company.
There are no dividends paid in the current year and no overdrawn loan accounts.
Whilst it is insolvent the Director doesn't want to leave the debts unpaid, the issue is how to best clear them off in the most helpful way.
The Directors Loan balance could for example be converted to shares.
The Ideal solution would be a negligible value claim for a loss and using that against the personal tax bill - they have very significant dividend income from another business of £500K+
They own 100% of this smaller company and 25% of the larger one, so its not an option to make charges up to the larger one.
My concern is if we only had a single company, then the transaction would be Dr Fixed Asset and Cr Revaluation reserve
By "moving" the asset in this way we are recognising what would otherwise be a revaluation through the P&L. Both subsidiaries are 100% owned by the same parent.
I agree on the consolidated position, its the presentation in the subsidiaries that concerns me.
There are plenty of hacking/cracking programs easily available on the internet which allows their users to read the password and hence break into files. These sorts of password are useful to prevent the casual reader from opening, but unfortunately are very easy to overcome.
To be more secure there are encryptions programs such as PGP key based ones, these are very much harder to break but potentially breakable also..