Question - How to handle an overpaid director's loan account?

Rae_Rae

Hi,

There was a directors loan account on the books that was paid back on January 2023, however it was overpaid by 20p.

I'm looking to try and bring this account balance to nil.

Is it possible for the company to reattain the 20p - if so how would this be shown in the account?

Or

Does the 20p overpayment need to be returned the account it originated from?

Thank you.

shamilkaria

Hi @Rae_Rae

I would have thought the 20p should be returned to the director.

However you need to have a look at the Jan 23 transaction as to why there is a 20p difference. It looks like they were trying to clear it down then. Look at whether they did a journal to another nominal code to try to clear the account down, then you may just have to do the same for the 20p. Or was a payment made to the director or payment received by the director, if that is the case then you would just pay the 20p back to the director to clear it down.

Hope this helps

Kind regards

Shamil

Rae_Rae

Hi @shamilkaria

The extra 20p arose from the director paying 20p too much back for the balance remaining on the director's loan account. I can see the final payment in the accounts.

I thought it would be the case to just pay back the difference despite being told that it was ok to keep. I didn't like that and would rather just pay to 20p back to nil the account properly.

This is definitely the approach I will be taking.

Thank you
Rae

shamilkaria

Hi @Rae_Rae

If the director is okay with it and if the firm that does your audits says it's okay then I wouldn't stress too much about it.

That's fine too you can pay the 20p back. But just be careful you might get charged a bank fee for the payment. One because it's a small amount and second any payments you make on the bank they may charge a transaction fee.

Also I might be starting a live chat app for accounting professionals would you be keen on joining?

Hope this helps

Kind regards

Shamil