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.
- Capital allowances or revenue is capital? 86 1
- any implications of this type of transaction 53 1
- How much did you pay for your website 1,687 28
- Sage 50 cost centre limitations 97 3
- What font do you prefer to use for correspondence? 288 11
- Straightforward email correspondence or PDF letter attached to blank email? 1,031 13
- How to post Sales figures in Sage50 Accounts (we use separate Sales ledger) 262 7
- Sage data 106 1
- Course costs for retraining as a barrister 422 9
- Limited company buying a car 362 6
- Funding Circle experience 157 3
- Excel query 122 2
- Do I need to pay my accountant 1,298 13
- Payment on account penalties 132 3
- Tax on free shares 147 5
- Flat Rate Vat 14.5% and 5% reduced rate VAT 208 3
- Capital allowances on sale and puchase of business assets 128 1
- Audit 492 14
- PPR relief and half hectare rule 131 3
- Buying a horse?? 431 12
- CTA study material 805
- Anyone have clients that use Pay4Later to offer customers credit? 496
- Raiders of the Lost Tax File 461
- Employment related securities question 324
- AIM Stocks and IHT 311
- Tax Relief for overseas employees 283
- Expat pension contributions? 282
- Trust for Employee 257
- Service Charge Accountant Career Options 234
- IPP (International Pension Plan) income 161