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.
- Unclaimed customer balance 60 3
- to VAT or not to VAT 26 1
- Processing RTI whilst on holiday 2,785 46
- Awkward insolvency practitioner 301 3
- What's the plural? 518 11
- Self Employed travel 297 7
- Accounting Crew 595 13
- Company Secretarial Software 1,240 26
- Resigning as only director 1,046 10
- Loan interest rental property 107 3
- Life assurance gains anomoly?? 205 1
- Payroll charges when raw data not reliable 539 7
- Mathematical conundrum on loan repayments 467 5
- Exactly which business miles can I claim from my employer? 178 10
- Opinions and advice needed 145 3
- Director salary from company limited by guarantee 68 1
- Complete business outside UK 68 1
- Builder - Roll over relief 335 15
- Goodwill receipt 313 7
- Sage training course 281 8
- Proposed Amendments to IAS 1 565
- Property exchange - 8-year legal delay following fall-out 420
- Accounting for Insurance Premium Financing 321
- IFA incorporation 291
- Mortgage interest claim on Buy to let hic up 285
- Can the receivers fees be allowed for tax? 276
- Moving into own BTL property - allowable costs 243
- SAGE Payroll Data for Import to MS Dynamics AX 230
- Will Ni be payable on the salary I receive abroad ? 212
- Cancelled 166