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DLA or prepayment ?

is there any justification that would allow treatment of loan to Director as a prepayment ?

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Director employed in Company A

Director owns minority share interest in Company B

Company A wishes to aquire the shares of Company B held by the Director

Company A has agreed the rice (500K) for the purchase of shares but as yet , no formal contract has been signed between the parties

As at 31/12/18 Company A  has "loaned" Director 40K on the basis of anticpated share sale transaction 

Question: Must this apparent "loan" be disclosed as DLA or is there any option to disclose as a prepayment against the anticpated share purchase ?

Many thanks



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By Accountant A
26th Jun 2019 15:26

Yes it must, no there isn't.

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By frankfx
26th Jun 2019 22:11

Any thought given to P11d reporting requirements, a few days to go.

Serious amount of money involved on share acquisition .

Wonder if the December 2018 accounts will reflect the contingent obligation .

If not a loan , no documentation ,could it be salary subject to PAYE.

When the £40,000 was minuted at the director's meeting what instructions were given to the bookkeeper on the accounting entries.

Wrestling with the classification of a transaction some 6 months or more after the event is questionable.

If the deal had been concluded by 5th April 2019, how would the £40,000 ''loan'' have been treated for PAYE P11d reporting purposes , lost in the champagne bubbles of £500,000 popping into director bank account?

So it's a loan or is it?

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