I run my own one-man limited company and over the years have built up from initially doing the book-keeping to now completing VAT, payroll, self assessment and (more recently) statutory accounts and CT600. I'm not an accountant but I am confident to handle what are relatively simple tax affairs.
To date I haven't used my director's loan account (at least not to borrow money from the company), however this may be worth doing later in the year (I won't bore you with the details of why, but just to state that there is plenty of money to do this and still meet the company obligations).
I understand that if it is over £10k it must either be treated as a BIK or interest must be paid at the current rate stipulated by HMRC (3% I think at the moment). I also understand that if the loan is still outstanding 9 months after the end of my company financial year S455 tax will be due at 32.5% and that this can be reclaimed when the loan is eventually repaid.
The loan will be in place at the end of the company financial year but will be paid off before the 9 months period following that, so my question is around the process that needs to take place to declare this in my statutory accounts and CT600. The accounts are straight forward, no impact on P&L, debtor added to current assets on balance sheet equal to the amount of the loan. I am also assuming there is somewhere on the CT600 that the loan can be declared? The part I don't understand is how to inform HMRC that the loan has then been repaid to avoid having to pay the S455 tax and then reclaim it.
If I have repaid the loan by the time I actually submit the accounts for that year is there anywhere in the process I can say "OK, here is the financial position at the end of the year, but I have now repaid this loan and don't owe the S455 tax." Or must the CT600 be submitted based on the position at the end of the year (where the loan was obviously still in place) and then HMRC contacted separately?
I'm just trying to determine if this is going to be an administrative burden or if it is relatively simple to do?
Any help very much appreciated.