Discussion
HMRC rules state you must repay any director loans back to your before your financial year end or 9 months, which ever comes first.
So, assuming you are a director of a few companies, is there anything in the rules to stop you taking out a loan and repaying it but then take another loan from your other company straight away or repaying your loan back on the eve of your financial year and taking the same loan out again on the first day of your new financial year from the same company?
Thanks in advance for your help in this guys.
So, assuming you are a director of a few companies, is there anything in the rules to stop you taking out a loan and repaying it but then take another loan from your other company straight away or repaying your loan back on the eve of your financial year and taking the same loan out again on the first day of your new financial year from the same company?
Thanks in advance for your help in this guys.
HMRC do not like taxpayers doing this as it is an obvious attempt to hide the fact that a loan exists. Technically you should not do this.
To prevent the hiding of such loan balances, Company Law stipulates that full disclosure of such "overdrawn" balances should be disclosed in the note to the company accounts. Failure to do so is breach of company law.
Finally, there are separate disclosure requirements regarding director loans under the PAYE Benefit in Kind rules if, at any time during the PAYE year the loan balance exceeded £5,000 and interest was either not charged on the loan or the interest charge was below the minimum rate as stipulated by HMRC.
New tax regulations coming in mean that accountants who fail to disclose such practice in their clients' company accounts could be fined themselves - so if you have an accountant he may not be keen to submit flawed accounts to HMRC.
To prevent the hiding of such loan balances, Company Law stipulates that full disclosure of such "overdrawn" balances should be disclosed in the note to the company accounts. Failure to do so is breach of company law.
Finally, there are separate disclosure requirements regarding director loans under the PAYE Benefit in Kind rules if, at any time during the PAYE year the loan balance exceeded £5,000 and interest was either not charged on the loan or the interest charge was below the minimum rate as stipulated by HMRC.
New tax regulations coming in mean that accountants who fail to disclose such practice in their clients' company accounts could be fined themselves - so if you have an accountant he may not be keen to submit flawed accounts to HMRC.
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