The Upper Tribunal has given its decision in Quillan, a case about the scope of s 415 ITTOIA 2005, which imposes an income tax charge where a loan to a participator in a close company is ‘released’ or ‘written off’.
In this case, the close company was placed into creditors’ voluntary liquidation and subsequently dissolved, without any formal resolution of an outstanding director’s loan account balance. In these circumstances the First-tier Tribunal had held that the loan to the director was neither released nor written off. The Upper Tribunal, reversing the FTT, held that the debt was ‘written off’ when the liquidator reached the conclusion that there was no recoverable value in the debt and reported that in his final report.
You can read the decision here.
Charles Bradley acted for HMRC in the Upper Tribunal.
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