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