s419 query

s419 query

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I have inherited a company in which various benefits have accrued to the directors loan account resulting in it being overdrawn. S419 tax was paid on the amount at the end of 2009 through corporation tax.  During the year 2010, £2479 of this loan was repaid, resulting in an inclaimed refund of tax of £619. The balance at the end of the year was reported on the corporation tax return, but there is nowhere to report the repayment of amounts from periods prior to the current year.  During the year 2011, loans of £2217 accrued resulting in a new liabiltiy of S419 tax of £554.

How is it best to report this on the corporation tax return?  I can put the new increase in loans in section 1, but I cannot report the repayments because they are for amounts from before the current year.  I dont particularly want to have to tell my client that they have to pay £554 now and hope that HMRC repays £619 later!!  Is there a way to offset them?

Thanks

Louise

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Euan's picture
By Euan MacLennan
02nd Dec 2011 14:17

s.455 answer

Get it right - tax is now payable under s.455 and refundable under s.458 CTA 2010.

As you say there is no facility on the CT600A pages of the company tax return to claim relief on repayments of loans advanced in previous years.  You have to claim in writing to the company's CT district.

I am a bit confused by the dates you are giving.  If a loan in a previous year was repaid during the calendar year 2010, the refund is payable on 1st October 2011 and would normally be netted of the normal CT tax due on 1st October 2011 on the 2010 profits.  The tax for a loan advanced during 2011 will not be payable until 1st October 2012.  Whatever the dates may be, the refund on a repayment in one year would be due a year before tax is payable on a new loan in the next year.

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