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Dividend vs Director's loan reporting in accounts

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Newbie alert - Can withdrawls from company acc to director's account be considered Dividend or Director's loan in an equal way (ignoring the fact that if the DL is paid back in 9 months, no tax liability arise)? My question is more to do with, does HMRC relly care if the withdrawn money is declared as a Dividend or DL, as long as correct tax is paid? Eg, at the end of a tax year, can I look at all my withdrawls and report X as Dividends and Y as DL (whatever ratio translates to a better tax planning?)

Thank you!

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By frankfx
16th Jan 2021 12:11

In short are you creating a post facto fairy tale?

For tax purposes you need to have the story concluded on or before the 5 April.

No editing or redrafting after that deadline date.

The dividend should be supported by correctly dated documentation.

A like post Brexit export paperwork.

The fairy tale is not an oral hand me down with twists and turns concocted by the orator.

HMRC have gone to the trouble and expense of producing a

Directors loan account toolkit.

It makes Grimm reading.

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Replying to frankfx:
By Truthsayer
17th Jan 2021 08:28

Haha, get real! I couldn't hazard a guess as to what percentage of directors' drawings are only classified as dividends/loans/salary after the year-end, but I bet it's large!

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By lionofludesch
16th Jan 2021 13:50

It might make no difference to the company's tax but that's not true for the director.

Dividends are taxable, Director's Loan withdrawals are not.

Thanks (1)
By Tax Dragon
16th Jan 2021 23:52

Yes, HMRC cares.

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By Truthsayer
17th Jan 2021 08:31

Whatever they might say publicly, most accountants do this.

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Replying to Truthsayer:
By Tax Dragon
17th Jan 2021 09:37

And IMHO that is one of the main drivers towards real-time reporting of money movement. You think MTD is the end position?

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