Joint directors of a company - one took more out than the other such that when he left he was still owed money..
Loan repayments were made post year end and post leaving.
Directors worked out the amount of loan to be repaid as being just the monies that were earned by that particular director not the usual dividends etc.
Any ideas how these loan repayments should be shown in the company accounts.
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The repayments are just credited against the loan that is being repaid by them. But is your question in fact that there are some adjustments to the indebtedness, and how to account for that?
Tax?
s455 CTA 2010 Loan to participator issue? .
Any benefit in kind from loan to Director?
If Director has ceased to be Director but continues as participator with outstanding loan, consider if Notional Distribution by virtue of s1064 CTA 2010.
No Longer a participator
Sorry... I didnt make myself clear - forgot to say - he's no longer a participator - no share in the company.
Devil in the detail
Putting aside any tax issue for the time being and on par with what John has said, the repayment itself should be simple but can you tell us more on how the debt was calculated? More detail is needed, particularly as you seem to suggest some muddy water in the calculation.
Sorry - more detail...
For some projects directors worked together but were paid separately and on other projects they worked separately and were paid separately but all went into one bank account
One took more out of the 'pot' than the other and after the director left, the company paid the leaving director back money he was owed. They worked the figures out themselves and in the bank account the repayment is designated 'John - loan repay'.
So its not a Directors Loan account as he is no longer a director of shareholder.
Any ideas what to do please?
So this is a credit rather than o/d loan account then?
If they have repaid the full amount to him at the year end then nothing to show in the accounts?
It's as easy as you think
When Director leaves, their balance just becomes another creditor. It's still the amount from the DLA but just named something else.
Directors loan..
no salary or dividends were taken during the first year as so much was spent on equipment so there was a loss.
So one director will be an overdrawn DLA (the one who took most out) and one is in credit.
I am doing the 2nd years accounts - at the end of the first year the director resigned still being owed his money. So do I just show as you would a normal loan without interest being charged?
Interest
The interest charged would depend on the agreement of how to deal with the loan once the director had left. If the loan was agreed to be repaid without any interest then that is how you would treat it.
Loan assistances
I had a query, can other service holder borrowers rely on director's funds for inspiring business investments and other expenditure?