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Misposted pension payments

Hello

I have just taken on a limited company client.

On reviewing the various documents and working papers I have discovered that the employers contributions to the directors Individual Pension Plan have been debited to his directors current account for the past three years.

I have always believed that employers contributions are deductible for CT purposes and therefore no relief has been claimed in the accounts in this case.

Can any readers advise on the best way to claim the relief ?

I was thinking of preparing a summary for HMRC restating the adjusted profits and overpaid CT Tax and then making a prior year adjustment in this years accounts for the pension payments that have been debited to the directors current account in the past.

Thanks

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By Ford
05th Dec 2012 13:25

Check First

Before you do anything you should check with the pension company how they have treated the contributions, this may simply be the director using company funds to make a personal contribution net of basic rate tax, they should have been shown on his self-assessment form if this was the case.

A company contribution is made gross.

If the pension company has claimed the basic rate tax back then the loan account treatment was correct, however an aggressive inspector could still claim this is a benefit in kind as a director’s personal liability has been settled regardless of the fact it has been posted to the loan account! If it’s a personal contribution he should not be using company funds.

Ford

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