New queries, issue 4663

AWOL

National Insurance exposure on writing off a company loan.

We act for a trading company which is owed £300 000 by a former shareholder/director. The loan balance was accumulated when the individual was a director but he resigned in 2008 and the shares were passed to a family member soon after.

The individual has been resident outside the UK for many years and it is now unlikely that the balance of the loan will be repaid. Our client is considering writing off the loan balance.

HMRC’s Company Taxation Manual at para CTM 61655 states that the loan remains taxable but is taxed as a distribution in priority to any potential PAYE charge. However CTM 61660 is not so clear on the National Insurance treatment.

Given the individual has been neither a shareholder nor a director for many years is there any exposure...