Anonymous
Share this content
5

Different BBL rules for Ltd and Sole Trader?

Paying dividends is okay apparently.

Didn't find your answer?

This is a follow up from a previous question where I asked if I could use the bounce back loan to repay my capital account, and the general consensus was no.

It's been confirmed that limited companies can use the loan to pay dividends from profit reserves, as long as the business stays solvent and repays the loan (otherwise it's favouring one creditor over another).

How is this different to repaying a capital account that has been built up from retained profits and tax has been paid?

Replies (5)

Please login or register to join the discussion.

avatar
By Paul Crowley
14th Oct 2020 20:59

Dividends as per normal if no Covid? Fine
Reapay the £45,000 Directors loan built up over 20 years? Not fine

Purpose is to keep payments as per normal, not subsidise, at tax payers cost the holiday of a lifetime.

Valid comparison?

Thanks (0)
Replying to Paul Crowley:
avatar
By Lee11_1989
14th Oct 2020 21:17

Agreed.

But what if someone had reserves of £100k. In 2019/2020, they made £40k profit but took dividends of £80k in 2 six monthly dividends of £40k using the reserves. In 2020/2021, they have so far made profit of £10k but want to issue another dividend of £40k. Is that an okay use of the loan? For arguments sake, the company only has £15k in liquid assets as they were exhausted last year, so the BBL is required for the dividend.

Long and short of it, BBL fraud will be rife and they won't imprison everyone. They'll simply enforce it to be repaid.

Thanks (0)
avatar
By AWeb72
14th Oct 2020 22:47

Don't abuse the anonymous function just to add a response to your previous question. Its quite simple, just create a username which, you know, isn't your name or email address

Thanks (0)
Replying to AWeb72:
avatar
By Paul Crowley
15th Oct 2020 00:44

That is I think four double Anons questions in 2 weeks

Thanks (0)
avatar
By Justin Bryant
15th Oct 2020 08:57

One has to distinguish theory from practice. Only about 3% of insolvent companies get looked at (investigated) by an IP (for director impropriety/recovery etc.) and for few if any of them will there be less than £50k at stake (it's usually just not worth their while basically).

It's the same reason there's so much R&D claim fraud, where HMRC's investigation rate is probably even lower than that.

Thanks (0)
Share this content

Related posts