Directors’ dividends

Like many directors of their own companies (or perhaps it is only my clients that this applies to) some of my client directors treat their companies as their own ‘piggy bank’. If they are short of personal funds they use the company’s money to purchase goods and services.

In fact one of my director clients admits that he tends to use the company chequebook to pay for things that he does not want his wife to know about. Perhaps I should add that these are to fund his hobbies.

His wife thinks his racing bike cost about £500 – this being the deposit paid from his personal account – whereas the true figure is about £2 000 the balance being paid by the company.

Can readers advise whether there are any potential legal issues arising from this practice?

I try to keep directors’ accounts with their companies...