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Treatment of DLA for bankrupt shareholder

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Client has gone bankrupt, which began in July 2017. Included in the bankruptcy was an overdrawn comapny loan, which will not be repaid. Client is a shareholder, but not a director. No S455 tax has currently been paid on the loan. Company is no longer trading, and the only liability will be an outstanding corp tax.

As a result of the bankruptcy, can the DLA be written off as impaired without a corresponding deemed dividend? If so, does the S455 tax not have to be submitted on the company return and just shown as written off?

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12th Nov 2018 16:13

I am not sure what S455 tax you are referring to as needing to be written off when you say none has been paid.

Isn’t the company also insolvent?

If so, you don’t need any more accounts. Just focus on getting HMRC onside.

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12th Nov 2018 16:38

The company isn’t trading, but was during the year and the accounts are now due.

Do you think the best approach is not to submit the CT600? But contact HMRC to see what they agree?

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to rae10000
12th Nov 2018 17:02

Yes if the company has no assets to pay any tax with (or presumably your fees).

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13th Nov 2018 09:41

Apologies if I have misunderstood something but how could the client owe a DLA if he was never a Director?

Do you mean he was a Director at the time of the DLA but subsequently resigned as a result of his Bankruptcy?

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