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A director’s loan account was overdrawn by £200,000 at the end of the accounting year and a dividend of an equivalent amount was declared as a repayment. Ffurther loans totalling £180,000 were made subsequently
We act on behalf of a limited company which is wholly owned by Mr B who is also a director. When preparing the company’s accounts after the end of its accounting year we discovered that there was a loan from the company to Mr B of £200 000 which remained unpaid.
The company had profits during the year and retained profits so eight months after the year end a dividend of £200 000 was approved at an annual general meeting and this has been credited to Mr B’s director’s loan account.
However we have now found out that between the last financial year end and the date of that dividend further loans of £180 000 have been made to the director from the company. Consequently after the date of the dividend there is still an outstanding loan account of £180...
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