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Can I charge DLA interest if the bank ac. is low?

The DLA is in large credit, but the bank balance is too low to meet any DLA interest payable.

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Hi All, thanks for looking at my question.

The directors loan account is in high credit, and we want to charge interest, but the bank balance is too low to meet the payment. We will only be charging interest annually. 

Should we charge the interest to the company, file the CT61, then just add the value to the DLA (creating compound interest), or separate the interest value to a different account? 

The company will probably run at low balance for some time yet, until the investment hits revenue-generation. 

Thanks everyone!

Replies (3)

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By johngroganjga
17th Jan 2019 17:19

Yes of course you can charge it if the client wants to.

But is there any point?

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By Matrix
17th Jan 2019 18:32

Why create work for yourself? Just file the CT61 when the interest has been paid.

You can still accrue the interest if that is what you meant.

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Replying to Matrix:
By VictoriaLondon42
21st Jan 2019 12:50

Thanks. I'm still a novice at some of the finer details.
So *recording* the interest amount does not trigger a CT61 submission, just the point at which the interest money is transferred to the director.

Specifically I ask this because the DLA has been in credit for over 2 years, so if this is correct, I can journal in interest for last year too,and charge compound interest until payment?

There are 2 companies in the mix. Company A is cash rich and lending to the the other, company B.
Can A provide more loan money to B to meet the interest payments? It seems to me like they should be able to, but as the interest is taxed at basic rate independent of the directors income tax, it seems like a loop that HMRC wouldn't love...

Thank you very much for your help here!

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