Bad debts between associated companies are now relatively simple in tax terms, thanks to this year’s budget.
No tax relief is due on a provision for intra-group debt; this represents no change from where we were before the budget.
But, on a formal release of the debt (i.e. under deed) there is no tax relief for the loss but equally there is now no tax charge for the company that has been released from the debt.
This position applies from 22 April 2009.
Cathy Corns is a tax adviser and a partner at Mercer & Hole. The views given in this blog are personal to the author.