Company funds transferred to personal account

Company funds transferred to personal account

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In order to obtain a better rate of interest a client has transferred company funds into a separate personal account. The intention was never to use the money personally and all interest is to be accounted for in the limited company records. I am concerned that this could be treated as a director's loan? or is there a substance over form argument I could use. It is a genuine transaction, not intented as anything else other than to achieve a greater investment rate.

Any comments would be welcome.
JMS

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By AnonymousUser
30th Jan 2008 10:01

Maybe
In theory you could argue that the director holds the funds on trust for the company such that beneficial ownership never changes. Co would need to ensure this was all properly minuted of course from the outset not least to prevent the director just helping himself to the money - i.e. leaving aside any tax issues.

I would suggest though that you check the terms & conditions of the account to make sure that no deception is being practised on the bank. I have no idea what these say but just wondered if, in opening the account, you assert beneficial ownership unless bank is told otherwise (e.g. when a child is involved).

When I came across this situation in the past, our advice was that a director's loan might arise and it would be better if the funds were returned and invested in the name of the company.

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