I know this topic has been discussed in the past but looking at the previous comments I still can't find a definitive answer which is just incredible to believe. Surely the Revenue must have guidance regarding the accepted treatment or the topic raised by them before ?.
On the one hand I agree with the previous view that it should NOT be treated as a debtor and therefore charged to the P&L, until such time as the overdrawn DCA is repaid, as otherwise a conditional debtor is being reported that in fact is not realisable until such time as the director satisfies the condition i.e. repays the overdrawn DCA.
I can see the argument for treating the S419 as a debtor on the basis that it is expected to be realisable but when you consider this in the light of other disclosed debtors, the fundamental difference is that all other assets are tangible and do exist without condition i.e. stock is tangible and physically exists, debtors are as a result of completed sales, etc. but the S419 debtor is not realisable until the point that the DCA is settled.
The dilemma is that if the S419 is treated as a P&L charge then the profits available for distribution as dividends (adjusted to DCA) are reduced, thereby increasing the overdrawn DCA balance on which S419 is charged.
If treated as a debtor then available profits/dividends are greater thereby reducing the overdrawn DCA and thus the S419.
It just seems hard to believe that HMRC would allow the S419 liability to be reduced by virtue of treating it as a debtor, increasing available dividends, and reducing the overdrawn DCA on which the very S419 is calculated.
Any further comments or answers as to the accepted treatment.