Directors’ loan accounts: Get the details right
Time and again, company owners and their advisers have run into problems with overdrawn directors’ load accounts. With cash still tight, Jennifer Adams offers advice on how to avoid getting into such situations.
With banks no longer lending and profits substantially reduced some company directors are finding that they are facing an overdrawn director’s loan account and a possible additional tax bill – as we have seen time and again AccountingWEB.co.uk’s Any Answers page.
HMRC is well aware of the problems and covered directors loan accounts in one of its first agent toolkits. Toolkits have no official status, but are well known as signposts to areas HMRC sees as worthy of investigation.
AccountingWEB’s own “toolkit” follows the rules set out in the Companies Act 2006 and Corporation Tax Act 2010 (CTA 2010) and answers some of the problems members have encountered. Here are the key points covered:
- Where problems arise
- What HMRC is looking for
- Correct Allocation and accounting
- When and what to disclose (s413 CA 2006)
HMRC ‘Toolkit’ Directors’ Loan Accounts
About the author
Jennifer Adams FCIS TEP ATT (Fellow) is Associate Editor of AccountingWEB. She is a freelance writer and author specialising in tax and corporate governance. Jennifer is proprietor of Naldrett Accountants. The information contained in this article is intended to provide for general educational use and information only. It is not intended to advise or recommend any particular course of action or opinion. The reader should not act or rely on any information contained therein without seeking independent legal advice.