Director's loan account: overdrawn or not?

Director's loan account: overdrawn or not?

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A company director has withdrawn money from the company during the year ending 31 March 2011. I expect that when the accounts are calculated the amount withdrawn will probably be less than the companies profits. However, as profits have not yet been calculated and a dividend has not been declared would this be treated as a directors loan?

Many thanks

DBTL

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By taxhound
11th Apr 2011 17:09

Yes

If a dividend was not declared, then the loan account will be overdrawn at the year end.

You can prevent a s419 issue by declaring a dividend post year end to cover it however.  You will need to complete a long CT return showing the loan account as overdrawn at the year end, but it will then have been cleared within 9 months, so no s419 due.

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By Swedish Chef
11th Apr 2011 17:20

Note re CT Return

Certainly before mandatory online filing, you no longer had to complete a "long" Return - the "short" version had been modified to deal with s419 tax (now s455).

Not sure how that sits now......

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