We have a client who has an overdrawn directors loan account of £30k ish and the company has a bank overdraft and loan of £30k ish, the bank lending is guaranteed by the director which he is paying personally at £400 per month, there is very little else on the balance sheet and the company has stopped trading and there is no likelyhood of it resuming. The bank are happy for the company to be struck off as they say they will just call on the directors guarantee but they are unwilling to formally remove the company name from the loan. Can the loan be treated as settled by the director and the o/d directors loan be offset by the bank o/draft and loan in the balance thereby removing the sect 455 liability and the bik issue.
Thanks
Replies (8)
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But they're happy for it to be struck off? Maybe I'm missing something obvious, but that doesn't compute in my head.
No point asking us - you need to ask HMRC.
I guess the bank will be happy to see the company dissolved as they will then be able to go after the director for the whole lot (although I would hope that they would agree terms). Problem is that if the bank won’t switch the loan to the director then I can’t see how the two can legitimately be offset. My advice would be to go for striking off and hope that HMRC are too busy to object.
Problem with that is HMRC would consider the DLA to have been released or written off resulting in a tax charge and probably no relief for the loss on loans as guarantor.
I should think that some document between the Director and the company evidencing the former standing in place of the latter as regards the bank loan might be sufficient to allow a credit of the same amount to the DLA. The company can then be struck off. Like others I find the bank's apparent attitude rather odd.
The bank sounds a bit silly , surely they would be in stronger position if they arranged new loan in directors personal name , particularly as company has zero assets ...after all directors guarantees can sometimes be challenged....
I would also suggest that in order to set off , you would need formal novation between all 3 parties