We have just discovered a client director has lent company £100k loan, by remortgaging private hosue.
Has built up £15k in interest since taking out loan 3 yrs ago. No interest ever paid by company, no interest deduction ever put on directors tax return.
Re tax return - relief will be claimed for the loan interest paid. Clients wants company to repay interest to him, therefore minimal effect on tax return as on edge of higher rate so potential refund available from tax on interest paid by co.
Dividends are out of question as there are other shareholders to take into account.
How do we go about paying the £15k interest from the company to the director? Can we pay all £15k in one go - surely this would give rise to an enquiry by HMRC as greater than market rate interest payment in year. Do we need to go back and amend accounts for previous 3 years to show interest payments? Then how do we do CT61s - is it possible to put it all on 1 return and pay 20% en masse, or will we need to do retrospective CT61s for each quarter since the loan was taken out? Can you do retrospective CT61s? Or is it best to write to HMRC explain situation and enclose cheque for 20% tax on interest to date and ask for CT61s to be issued in future?
Any help much appreciated.
- How to avoid a bankruptcy 349 9
- Limited Company 162 5
- Selling a practice 240 3
- How much to charge 138 3
- CIS Software Recommendations 196 4
- How to convert a pdf file to.. 424 8
- Accounting Software 316 4
- VAT: Passing on Import Duty 59 1
- Share issue 179 10
- KPMG email campaign and impact on market 1,084 14
- PSA Agreements 367 6
- VAT reverse charges 271 3
- Mobile phone and P11D 181 3
- Benefits to having a partner as director and shareholder, even though not acting as one or taking dividends!? 793 19
- Dividend in Specie on demerger 148 2
- Gross Profit Margin- motor vehicle mechanic 255 6
- P11D Rejection 346 8
- Fee reasonable or OTT? 633 10
- Subsistence expenses paid directly from company account 330 5
- Late filing penalties refunded 394 5
- Theatre Tax Relief 430
- Has anyone been affected by the RBS payment breakdown? 336
- Windows 10 on-going support ... 316
- Straight line write off of Purchase Goodwill ??? 300
- Perkbox 253
- Compensation - Taxable or not then CGT or IT 234
- FRS 102 compliant illustrative accounts for an insurance company 233
- Self Assessment - What to enter on the return 214
- Document Management Systems 202
- WIP Software 188