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HMRC internal manual

Capital Gains Manual

Losses: loans to traders: irrecoverability: borrower continues to trade

Any judgement as to the prospects of recovery of a loan should be made on the basis of the facts as they stood at the time when the loan is claimed to have become irrecoverable. Although the balance sheet of the borrower as at the date of claim is unlikely, in itself, to be an adequate basis for accepting a claim, such a balance sheet may be taken into account in coming to an overall view of the position at that date. Regardless of when the accounts were actually produced, the balance sheet will give a snapshot of the company’s affairs at that date. Accordingly, consideration of such a balance sheet is not using hindsight to form a view as to the acceptability of the claim.