Dividend and directors loan

Beckster
Beckster Registered Posts: 12
in General accounting discussion
Morning, I've been asked to complete a tax return (has 15 day extension!). The client had a limited company for 3 months during the year. They took a small dividend but when the company ceased training they owed the company a directors loan. This has been dealt with for CT.

I'm just double checking how I deal with it in SA. I'm fairly sure I treat the dividend as dividend income, although client thinks that as company had no money left then there was no profit?!

Thanks

Comments

  • Beckster
    Beckster Registered Posts: 12
    Sorry, should have been a bit clearer. They did make a small profit but my client thinks that as there was no money left in the business when it closed that they don't need to show it as dividend income. Think it is just lack of understanding on their part. Doesn't affect tax due anyway. I will just have to try and explain it to them a bit clearer. They already had the dividend ( and a little bit more ) while the company was trading.

    Thanks
  • Beckster
    Beckster Registered Posts: 12
    All I can find information for is if the loan is more than £10,000. It is £700. Does this still need to be included in SA?

    Thanks
  • Beckster
    Beckster Registered Posts: 12
    Many thanks for your help.
  • MarieNoelle
    MarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,373
    mrme89 said:

    I think that the guidance you refer to is regarding s455 and BIK on loans.

    A loan write off is a distribution. And if the loan write off was in capacity of director, and not shareholder, it should have also attracted Class 1 NIC.

    I have never dealt with this in practice but assume it means the PAYE scheme has to be reopened to process the NIC? I welcome your thoughts on this.
  • burg
    burg Experienced Mentor GloucesterModerator, FMAAT, AAT Licensed Accountant Posts: 1,441
    MarieNoelle said:

    mrme89 said:

    I think that the guidance you refer to is regarding s455 and BIK on loans.

    A loan write off is a distribution. And if the loan write off was in capacity of director, and not shareholder, it should have also attracted Class 1 NIC.

    I have never dealt with this in practice but assume it means the PAYE scheme has to be reopened to process the NIC? I welcome your thoughts on this.
    I would always look to argue the write off was not in their capacity as a director but as a shareholder.
    Regards,

    Burg
  • MarieNoelle
    MarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,373
    Would HMRC really seek to pursue this though in reality? Considering the sums involved and the fact that the Ltd co is now dissolved. In addition if S455 tax was paid it would now need to be re credited following the write off?

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