Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration
Home Saved articles Viewed items Login Contact Free Trial
|

Loan account

© Copyright LexisNexis 2024. All rights reserved.

11 December 2012
Issue: 4383 / Categories: Forum & Feedback
A company has paid more to its director/shareholder by way of dividends during a year than its post-tax profits. There is concern that a P11D has not been submitted and that this will result in substantial penalties

Our client operates his business through a limited company. The director who owns 75% of the business lives beyond his means and his director’s current account (DCA) is overdrawn at all times.

During 2011/12 the client took a basic salary of £7 020 and the rest of the money by way of dividends.

While preparing the annual accounts for the year ended 31 March 2012 we found out that the director took around £25 000 more in dividends than he was allowed to. The company’s after-tax profits were £100 000 but £125 000 was taken as dividends.

Our client is happy to pay tax under CTA 2010 s 455 to HMRC on the £25 000 overdrawn DCA but our concern is for the benefit in kind implications on the beneficial loan of £25 000.

The client is also happy to pay personal income...

If you or your firm subscribes to Taxation.co.uk, please click the login box below:

If you are not a subscriber but are a registered user or have a free trial, please enter your details in the following boxes:

Subscribe Now...

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this item in full.

Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.

READERS' FORUM premium icon
Read All
Tax tip: National Insurance contributions Readers’ forum: Treatment of shares in freehold on disposal Readers’ forum: Sale of personal collection of rare dolls Readers’ forum: HMRC’s attitude to failed R&D claim Readers’ forum: Order of reliefs after donor’s unexpected death
FIVE WAYS TO MAKE ACCOUNTS PRODUCTION AND TAX EASIER.
Download the exclusive Xero
free report here.

New queries
Please email any questions you might have
to: taxation@lexisnexis.co.uk.

NEWS premium icon
Read All
Returns submission when exempt from MTD for VAT Spotlight targets disguised employment income scheme Massive hike in VAT receipts in 2023-24 EU council agrees on VAT in the digital age package Private schools challenge VAT on fees
DEADLINE DATES
CASES premium icon
Read All
Recovery of an invalid refund Interactions with HMRC’s online system Expenditure was not subsidised Legitimate expectation after HMRC instruction Failed sub-sale scheme results in higher liability
MOST POPULAR
This week's opinion: 14 November 2024 Returns submission when exempt from MTD for VAT Spotlight targets disguised employment income scheme Massive hike in VAT receipts in 2023-24 EU council agrees on VAT in the digital age package
Copyright © 2024 LexisNexis
back to top icon