Writing off a loan

We have been asked about writing off loan accounts. Over a period a director/shareholder has drawn random sums from the company and there is a debit in the company's balance sheet at the year-end.

We are happy we can deal with benefits in kind and the TA 1988 s 419 tax but our client would now like the loan to be cleared out of company funds.

A dividend paid would achieve the necessary result but the borrower is not the sole shareholder and therefore this route (without a suitable waiver by the other shareholders) would require a dividend to be paid to all the shareholders pari passu which they do not want although they are happy for the indebtedness to be written off.

We have pointed the client towards ITEPA 2003 ss 188 and 189 (loan released or...