Is Capitalising debt tax avoidance?

Inland Revenue has issued a recent statement to the effect that issuing shares in cancellation of debt owed to a shareholder is tax avoidance. They say it is tax avoidance because of the purpose and effect of avoiding remission income that would otherwise arise if the debt was forgiven/remitted. Inland Revenue's statement is alarming.

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Impact of Remission income on Loss Offsets

This article addresses a company that has a loss on account of expenditure which the company ultimately never pays. The particular context is use of the loss by way of offset against profits of a group company. What happens when the loss company is relieved of the obligation to pay the expenditure?

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