Thank you to all contributors. Just to be crystal clear. The loan arrangement was never intended to be a sham or tax dodge. Any tax that becomes due following the cancellation of the loan will be paid in full. My client was trying to do a good deed, but unnecessarily complicated matters by lending the money through the company.

Agree. That would have been my advice.

The loan by the company was never intended to be a tax break. If it was, it would have been a very poor one. The intention was for the company to be repaid and this would have been possible had it not been for a a very sad life-changing event.

My client is more than happy, and able, to settle any personal tax liabilities which may arise. You are being cynical.

FFS. Really?
And yes. I do get it. The director has spent the last 30 years satisfying his fiduciary duties. Correct procedure was followed (including obtaining a CCL prior to making the loan) and all decisions and actions minuted.
Some directors do follow the rules.

Thank you WP. That is what I meant.

The person who received the money is not a relative, just a long-standing friend of the director. The director is wealthy and wanted to help. It was originally proposed that the loan would be repaid to the company within 5 years. However, as circumstances changed, it was clear that this was not going to be possible.

(I did mean that the loanee was the person whom received the money)

Thank you.

Thanks for your comments. The loanee is not a shareholder or director.

That's a good point. Money lending is not part of the trade and I assume that the previous Accountants checked the Mem and Arts.

But gift from company means the giver avoids tax on getting the money out to make the gift
How would this work?
Thank you.