S455 and dividend allocation
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wendyallen1
Registered Posts: 3 New contributor 🐸
Hi Everyone,
This is my first post! I have had a client posing many questions today, which I am unsure of and my husband asked me if AAT had a forum! I will definitely be using this platform in future! My problem is that this husband and wife team have run up a director's loan of £9500. I am supposed to file their annual accounts tomorrow and he didn't get information to me until Tuesday this week! I thought that it was a straight case of applying dividends against this loan, but today he dropped the bombshell that they receive child benefit and tax credits for their 7 children and he couldn't risk his earnings increasing! He wants to reallocate the shares, so that his wife has a much higher shareholding and he wants to know if the corporation tax which he will pay on the director's loan via the s455 will come back to them. If anyone has any wise counsel and advice, it would be very much appreciated! Thank you. Also - is this the sort of discussion which I should be posting on this platform? I haven't had time to read anything! Doh!
This is my first post! I have had a client posing many questions today, which I am unsure of and my husband asked me if AAT had a forum! I will definitely be using this platform in future! My problem is that this husband and wife team have run up a director's loan of £9500. I am supposed to file their annual accounts tomorrow and he didn't get information to me until Tuesday this week! I thought that it was a straight case of applying dividends against this loan, but today he dropped the bombshell that they receive child benefit and tax credits for their 7 children and he couldn't risk his earnings increasing! He wants to reallocate the shares, so that his wife has a much higher shareholding and he wants to know if the corporation tax which he will pay on the director's loan via the s455 will come back to them. If anyone has any wise counsel and advice, it would be very much appreciated! Thank you. Also - is this the sort of discussion which I should be posting on this platform? I haven't had time to read anything! Doh!
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Comments
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Hi Wendy.
I have only just seen your post (have changed my notifications settings now) and I expect you have already filed the accounts due to the deadline (unless you applied for an extension). I am new to the forum as well, but think this is what it is used for!!
You can reclaim the S455 charge once the loan has been repaid (or partly repaid), either by amending the tax return (if the window is still open) or via a Form L2P.
Shareholdings can't be backdated though and so if he is trying to move previously generated profits to his wife he may find that difficult. Going forward it should be okay though.
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Oh my goodness, thank you Steph! I had my daughter help (she's training to be a Chartered Accountant) and Dan Steele kindly called me - what a STAR!!! This chap is wanting to either reallocate share distribution or reclassify shares now. Do you think I should point him to First Formations, who set his business up?0
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They should be able to help him with the paperwork side of things, if you do not feel comfortable with it yourself, however I am not sure if they give any sort of tax advise with it as well.1
