I'm having an office debate with a colleague.
A director of a UK Limited Co has been a non-resident for 10 years.
My understanding of the legislation is that if he receives dividend income he can choose for this to be:
a) Taxed in the usual way.
b) Treated as diregarded income and he loses his perosnal allowance.
My colleague agrees with me on this point. I then said that if an overdrawn loan is released/written off then this would be treated as 'dividend income' and that it stands to reason that this could be treated as direagrded income also. My colleague does not think that this is true and feels that HMRC wouldn't allow this loophole for non-resident individuals to remian in place.
Any input (with reference to guidance/legislation) to end our debate would be welcome.
Thanks in anticiaption