Director loan account over two accounting periods

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I'm having trouble getting my head around the Director's Loan Account. I'm a director and there is one other director.  He has used the company bank account to withdraw cash, he then provides me with receipts but the cash withdrawl is always greater! So I have charged his DLA when he took out money at ATM then when he provdes me with a relevent business expense receipt I reduce the DLA by this amount. 

In about two months will be the 9month repayment date, where he has to pay off his directors loan for that accounting period but he has also had a directors loan account overdrawn for the accounting period that follows. Am I correct in thinking that the DLA account has to be repaid 9months after the accounting period that it relates to? So it is possible to have two dates in which to clear the DLA for two different periods?

 

 

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By Ruddles
22nd Feb 2017 16:26

Correct. You are concerned only with the amounts advanced in each period. As far as period 1 goes, the further advances in period 2 are, at first pass, of no relevance as far as the timing or amount of repayment required to avoid a s455 tax in respect of period 1 is concerned.

However, the further advances in period 2 could well have a bearing on whether the repayment actually avoids a s455 charge - due to bed & breakfasting rules. If you need them explained to you then I suggest that you pay a competent adviser to do so.

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By becca.S
22nd Feb 2017 17:40

Thank you Ruddles :)

I've read about "bed and breakfasting" rule and from my understanding it would only apply to us if we paid back the DLA account from period one when the 9 months are up and still continued to add to the DLA in period 2 after that payment.

When we pay back the first DLA in 2 months time we shan't add any more to it.

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