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Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 15946
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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when a limited company goes into liquidation and the only creditor

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when a limited company goes into liquidation and the only creditor is the director, e.g. £10,000 owing to the director, can that director claim any tax allowances against his personal tax or reclaim any of this loss. Thanks for any information.

Your options are limited I'm afraid. All you can do is claim a capital loss which can only be used against capital gains. Take a look at the HMRC helpsheet HS296 for more information and the conditions for a claim.

Once you have established the loss, you can claim relief against gains made in the same tax year or in future tax years if you have no gains in the same tax year. If the loan was effectively irrecoverable in either of the two previous tax years, you can claim it in either of those years if you have gains against which to claim it.

I hope this helps but let me know if you have any further questions.
Customer: replied 4 years ago.

Hi Tony,


Thank you for the info. I thought as much but its good to have it confirmed. One last thing though. A friend's company went into liquidation quite a few years ago and the directors of that company had quite a large refund from HMRC. Some company dealing in tax affairs actually approached them and did all the paper work etc. and were successful in obtaining this refund but unfortunately my friends cannot remember what or how it all came about. Would you have any ideas?

You cannot compare your company to your friend's company simply because they both went into liquidation. There could be any number of reasons why your friend's company received a tax refund.

If, for example, your friend's company made a loss in its final year, the loss could have been backdated and offset against the previous year's profit and generated a tax repayment. There may have been unclaimed capital allowances that the company who approached your friend's company spotted when they looked at it in detail.
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