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Discretion on a s455 repayment

Does HMRC have any discretion regarding a s455 repayment date?

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To use easy numbers, director had an over drawn directors loan account at 31 March 2018 of £100k

The director died 8 months after the year end and his assets were frozen. Consequently the estate was unable to repay the loan balance within 9 months of the year end.

A s455 liability became payable (and was paid by the company).

The estate then repaid the loan balance in April 2019.

HMRC have stated that the earliest the s455 will be repaid is January 2021 (ie. 9 months after the accounting period in which the loan was repaid).

This does fit with the legislation, but will be nearly 21 months after the company has received repayment of the loan. I’m loath to propose shortening the year to artifically bring forward the repayment date. Has anyone had any discretion on this point from HMRC to enable the s455 to be credited against corporation tax sooner, or actually get a refund?

It seems that HMRC will not pay any interest on this amount and should the company have cashflow issues, it feels bizarre that they can't chase a debtor for the cash. 

Suggetsions welcome.


Replies (5)

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By Wilson Philips
15th Nov 2019 12:09

There's no debtor, because the repayment does not become due and payable until the statutory date.

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Lisa Thomas
By Insolvency Practitioner
15th Nov 2019 12:18

I had a similar issue on one of my MVL cases and HMRC would not budge - I had to change the year end date.

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By lionofludesch
15th Nov 2019 13:41

It's bad luck but I think HMRC are within their rights.

When I say "think", I mean "know", just in case JDBENJAMIN is reading this.

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By whitevanman
15th Nov 2019 17:21

This is one of the odd issues brought about by the move to SA.
At the point when a loan is made, there is a period of "grace" upto 21 months. The loan is made in the AP but no tax if repaid within 9 months of the APE. This allowed the S455 to come into line with CT and fit SA.
The downside of course, comes at the other end when the loan is repaid. Again there is a gap between repayment of the loan and the tax effect (repayment of tax). No interest is charged at the "front end" and no interest is paid at the "back end".
It all sounds fair, unless you are the one who has to wait a long time for your repayment.

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By lionofludesch
15th Nov 2019 17:29

It could all have been avoided by the director not borrowing £100k.

That's the risk you take - he gambled and lost.

Not that he'll be all that bothered.

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