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Previous Corporation Tax liability

Corporation tax liability

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New limited company client has outstanding Corporation tax liability in 2019 but old accountant not shown that in 2020. Instead he offset against directors loan. Am I right saying that its a still business liability and needs to be shown in accounts ( True and Fair concept)? OR shall I not bother? Sorry if its a silly question.

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By David Ex
19th Oct 2021 15:24

I’d go with “business liability”.

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By pauld
19th Oct 2021 15:27

I would have thought it is still a company liability and should be shown in accounts. Your new client may have told old accountant that he would settle from personal funds hence DLA entry? but never actually paid it.

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Replying to pauld:
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By Paul Crowley
19th Oct 2021 15:34

That would be my guess

@OP
The company owes the money until it paid
If that means that s455 tax needs to be paid then so be it

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Replying to Paul Crowley:
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By Adzuk
19th Oct 2021 20:17

I would book that as dividends OR she can repay it within 9 months to save extra tax :)

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Replying to pauld:
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By Adzuk
19th Oct 2021 15:53

thanks, agree but as it was 2019 tax and Director did not pay so should be in 2020 accounts as liability. There were losses ( accumulated as per tax computation) but surprisingly were not claimed either. :(

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Replying to Adzuk:
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By Paul Crowley
19th Oct 2021 16:06

Sounds like prior person not really an accountant

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Replying to Adzuk:
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By CJS88
20th Oct 2021 13:32

Are you in time to amend the CT return, bring in the losses and reduce/eliminate the tax liability?

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Replying to CJS88:
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By Adzuk
20th Oct 2021 14:33

That’s the problem , not on time

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Stepurhan
By stepurhan
20th Oct 2021 09:19

If it hasn't been paid, it is still a business liability.

The only logical reason for offsetting it against director's loan is if it was thought the director had paid it personally. I assume you have confirmed this is not the case.

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