I have a company with three directors.
One of the directors has a DCA owed to him in excess of £90k. The other two Directors (who are also family members) have DCA's where the owe money to the company.
Is there a way the director can gift some of his DCA to the other two to clear the overdrawn DCA's??
Would there need to be a written & signed agreement between them?
Replies (4)
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If there was a written and signed agreement...
... it wouldn't be a gift. Just get him to "send" letters to the donee telling them that he's giving them the money by transfer between the DCAs and a letter to the company secretary instructing the company to make the necessary transfer.
You'll have thought about the IHT aspects, I imagine?
.
I would advise that if the company was in funds - it pays the director out, he then gifts the other two the cash and the other two then pay their debts to the company. Company is no worse off.
This stands more ground in my mind than a paper shuffling excercise.
It is obviously dependent on the company having the cash in the first place! If this is not possible, then as cirius says just get the paperwork in order.
The gifts will be PET's for IHT but that in itself is not a big issue.
Andrew Scott
I would always evidence everything by using cheques the company repays the loan by cheque. The director then gives a cheque to his family members. They then write a cheque to the company