We have just picked up a new client and are confused by the tax return prepared by the previous accountants.
Basically our client retired as a company director some 3 years ago and had an overdrawn loan account on retirement. He was not longer employed by the company and at this point and had no shares and therefore was no longer an employee.
However, the previous accountants have completed employment pages post retirement showing nil earnings but a BIK on the overdrawn loan account despite no P11D being prepared by the company. The BIK being based on the P11D prior to retirement as the loan account has not been repaid.
Can this be corect as he is not an employee of the company. Surely the retired director is merely a company debtor?
Does it make a difference that this is a family company which is now run by the retired directors son's?
Thanks
Jason
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clearing loan account
in practice would it be permissible for the retiring direct to be" paid" a termination payment up to £30,000 - the payment taking place by way of credit to his overdrawn loan account?
Associates
Also, presuming the sons to be shareholders in the co, then the loan will remain within the provisons of section 419, being a loan to an associate of a participator.
ok
The loan was given when your client was a director. Therefore until it is repaid beneficial loan interest still applies.