Company is a close company. Director has been dismissed for gross misconduct and via a shareholder resolution is resigned as a director. Under the shareholder agreement the shares have been acquired back by the company at par value.
A loan is currently outstanding to the company of £50K.
The company is commencing action to recover the loan however it is unlikely that this will be successful due to the finances of the former director/shareholder.
Is Sec 455 tax due if the loan is still outstanding at the company year end. The year end is after the resignation of the shareholder and the shares are no longer held by her at the year end?
Replies (7)
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There is one important fact
And you could not be arsed to tell us.
When the £50K loan arose, was the individual a participator in the company. The answer to that question will be the same as the answer to yours.
Presumably the loan has already been reduced by the par value of the shares acquired.
Presumably the debtor was a shareholder when the loan was made. Difficult to imagine that a new loan would have been advanced after the debtor was dismissed for gross misconduct. Then yes it's within S455 until repaid, waived or written off.
I am sure your assumptions are correct John
Nonetheless, why can people not tell us the important facts, rather than making us all just guess? It is very annoying.
I am sure if a client wandered into their office and said, "I'll send my books and records to you in a couple of weeks, but in the meantime can you tell me how much tax I have got to pay?", they would get an earful!
The deadline for the loan to be repaid, waived or written off for S455 not to be applicable is in fact nine months after the year end, not the year end itself.