Old rules: loan relationships: connection and bad debts: exceptions to rules
Summary of exceptions
This guidance applies to periods of account beginning before 1 January 2005
There were four exceptions to the restriction in para 6. They applied in the following circumstances.
|1||Para 6B(1)-(4)||Bad debt relief has been given before connection||CFM81180|
|2||Para 6B(5)-(7)||Creditor has acquired bad debt in certain circumstances||CFM81190|
|3||Para 6(4)||Connection only arises because the debt is exchanged for equity||CFM81200|
|4||Paras 6A & 5(6)||The creditor company goes into insolvent liquidation||CFM81210|
These provisions modified the basic rule, that there was no bad debt relief for connected parties.
In addition, this section of the old rules guidance deals with what happens when a debtor company goes into insolvent liquidation (CFM81270).