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Best way to proceed (BBL)

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I'm a sole trader with a limited company I don't use. I took out £25,000 BBL last year. I don't have any issues with the monthly payments but since it wasn't strictly above board I want rid of it sooner rather than later. I was an idiot, I guess.

What's the best way to pay this back? I can do £5,000/m over the next 5 months. Can I just FP the money from my personal bank to the Ltd company bank account and pay it back this way?

The money I used for a mixture of business things and transferred some out to myself. I didn't do a director's loan or anything.

What trouble could I be looking at?

I'm assuming those getting into trouble at the moment are those defaulting on their loans/making applications to strike off/DS01 with an outstanding loan balance which then sets alarm bells off and prompts the banks to take a deeper dive into what they've been doing?

What would you do in my situation?

TIA

Replies (15)

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By SXGuy
28th Jul 2021 06:23

"The money I used for a mixture of business things and transferred some out to myself. I didn't do a director's loan or anything."

What would you call transferring out to yourself if its not a director loan?

What would I do in your situation? Pay it back. Obviously.

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Replying to SXGuy:
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By ke3os03
28th Jul 2021 11:05

SXGuy wrote:

What would I do in your situation? Pay it back. Obviously.

Yes, of course. I am just asking how I should go about this so it's legal and any tax that I might owe is also paid.

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By Leywood
28th Jul 2021 08:45

"What would you do in my situation?"

This is a site for Acounting professionals so none of them would get into this situation.

Pay the loan back. But don't add to your foolishness by not getting an Accountant and not reporting and paying the correct tax bill. You do have a Directors loan.

It will be more than the bank delving deeper.

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Replying to Leywood:
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By ke3os03
28th Jul 2021 11:06

So should I pay back the loan in its entirety over the next few months and then speak to an accountant to work out how much I need to pay in tax?

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Replying to ke3os03:
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By legerman
28th Jul 2021 13:54

ke3os03 wrote:

So should I pay back the loan in its entirety over the next few months and then speak to an accountant to work out how much I need to pay in tax?

I would get the accountant on board immediately (do you have one as a Sole Trader?) It may not be too late to avoid or reduce a tax charge, and even if it is, they can be best placed to getting it repaid at a later stage.

You also mention about transferring some of your customers to the Ltd, which may be or may not be a good idea, again the accountant will be best placed to help you with this.

Happy to have a chat if you want to take an accountant on board, please send a PM.

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By bernard michael
28th Jul 2021 10:15

"The money I used for a mixture of business things"
"with a limited company I don't use"

The OP's 2 statements are mutually exclusive. Is he saying he used the money for expenses unrelated to the company in which case there is a Director's Loan situation

Could he please clarify ??

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By Justin Bryant
28th Jul 2021 10:28

The nominee argument may work to avoid a director's loan. See:

https://www.accountingweb.co.uk/any-answers/can-a-co-bbl-be-treated-as-a...

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By lesley.barnes
28th Jul 2021 11:30

I'm baffled how your limited company could take out a BB loan for £25k, which would be 25% of your business turnover (so £100k turnover) when you say you don't use your limited company. Is it the limited companies BB loan or did you take it out personally as the sole trader? You then say you've used some of the loan for business (Ltd Co or sole trader?) and taken some personally. Our answers depend on which entity has borrowed the money and which entity has spent it. You say you don't have any problem paying the loan back - how would a limited company that you don't use and is therefore generating no income pay back the loan? You need to speak to an accountant before you dig yourself in any deeper.

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Replying to lesley.barnes:
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By ke3os03
28th Jul 2021 12:04

I make around £100,000 as a sole trader. I had planned to move my business to the Ltd company but never got around to it.

I could do this now in theory and therefore the company would begin making money.

So how could I put the £5,000/month back into the business to pay the loan off?

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Replying to ke3os03:
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By Hugo Fair
28th Jul 2021 12:25

You've not answered the key questions asked by Lesley:
* Is it the limited companies BB loan or did you take it out personally as the sole trader?
* You say you've used some of the loan for business (but how much and for which business - Ltd Co or sole trader)?
[Our answers depend on which entity has borrowed the money and which entity has spent it.]

But frankly when you ask "What trouble could I be looking at?", the list is much longer than you seem to think (i.e. it's not just loan repayment and tax issues).
As Lesley concluded "You need to speak to an accountant before you dig yourself in any deeper" ... and, at the risk of stating the obvious, this means appointing an accountant now!

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Stepurhan
By stepurhan
28th Jul 2021 12:21

To pay it back early, you will likely need to contact the bank. Because it affects the interest due (and hence, how much needs to be paid) you won't know how much to pay otherwise.

Whether the bank looks to make enquiries into this is a risk you'll just have to take. They are getting their money back from you this time, but they may still not want to do business with you in future as a result of your actions.

Perhaps don't do things are not "strictly above board" in future if you can't deal with the consequences of that.

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Replying to stepurhan:
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By ke3os03
28th Jul 2021 12:35

Yes, I completely understand. I will repay the loan, contact an accountant to calculate tax, and deal with any consequences if they come. I'll move some of my clients to my Ltd company so that it at least has some income coming in.

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Replying to ke3os03:
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By Tom Cross
28th Jul 2021 14:03

You seem to have difficulty in understanding that, if you put the cart, before the horse, the cart won't move.

Speak to an accountant. Take advice. Act accordingly.

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By lesley.barnes
28th Jul 2021 12:34

Posted in error

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Lisa Thomas
By Insolvency Practitioner
02nd Aug 2021 11:28

Sounds to me like OP may well have committed fraud in the initial application and misuse of funds...Eek!

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