Sorting personal tax on overdrawn director’s loan for dissolved company

Discussion in 'Insolvency' started by BusyBeeBee, Jun 14, 2019 at 10:19 AM.

  1. BusyBeeBee

    BusyBeeBee UKBF Newcomer Free Member

    11 0
    Hope you lovely forum-ers can guide me through (hopefully) the end of this difficult business closure saga.... :)

    I had an overdrawn director’s loan of £20k. The business was dissolved in February. I have started my SA return online and entered the DLA amount showing on my company's Sage package (as the company did not submit final accounts) under 'Other UK income not included on supplementary pages', is this the correct place?

    Is it OK to reimburse myself (or rather reduce my DLA as a contra) for use of home as office, mobile phone, mileage, etc. up until the time of the company ceasing to trade/being dissolved? These are legitimate expenses that were incurred and are the same amounts roughly as previous years.

    Another question I have is I am still paying off a company loan of £1200 per month from my own money, and I was paying that in the time in between the company ceasing to trade and being dissolved. The loan is still in the company name but has a personal guarantee on it. However, the loan company charge a whopping £5k admin fee to transfer it from the company name to the personal guarantor so its not been something I really want to happen, although they know the company has ceased to trade and from what I gather they are just happy to continue so long as the loan is being repaid. Is there anywhere on the SA form I need to enter this information?

    One interesting point that still has me very puzzled is the company did have an outstanding amount to pay HMRC. They did object to the dissolution (which I expected) so I then started a liquidation process. However, before the liquidator submitted all the information to HMRC, HMRC suddenly removed their objection less than a week before the dissolution date and it was automatically struck off as CH said it was too late to change this process. Thinking on it now, I should have personally cleared the whole company loan via the DLA before the actual dissolution date and then I wouldn't have all this extra taxable income.

    Any advice very appreciated!
     
    Posted: Jun 14, 2019 at 10:19 AM By: BusyBeeBee Member since: Jun 30, 2018
    #1
  2. SteLacca

    SteLacca UKBF Ace Free Member

    1,315 260
    The released DLA is an income distribution. Declare it as a dividend for the correct tax treatment. The way you have done it will over-charge tax.

    You'll struggle with the expenses, though you could probably get away with £4 p.w. use of home provided that you had salary from the company against which to claim it.
     
    Posted: Jun 14, 2019 at 10:29 AM By: SteLacca Member since: Jun 16, 2016
    #2
  3. BusyBeeBee

    BusyBeeBee UKBF Newcomer Free Member

    11 0
    Thanks SteLacca. No accounts have been prepared for the last nearly two years but I don’t think there is enough profits the company to declare as a dividends. But I’ll run some reports from Sage to see what it shows. It might set off a bit.
     
    Posted: Jun 14, 2019 at 10:54 AM By: BusyBeeBee Member since: Jun 30, 2018
    #3
  4. SteLacca

    SteLacca UKBF Ace Free Member

    1,315 260
    Regardless, when a loan is released or written off it's treated as an income distribution and taxed as dividend. It isn't accounted for as dividend and isn't declared as dividend, so distributable reserves are irrelevant.
     
    Posted: Jun 14, 2019 at 11:01 AM By: SteLacca Member since: Jun 16, 2016
    #4
  5. BusyBeeBee

    BusyBeeBee UKBF Newcomer Free Member

    11 0
    Thank you! However I’m not sure what an ‘income distribution’ is. Can you explain? Also ‘taxed as dividend’ when it isn’t accounted for, or declared, as a dividend. The company, before it was dissolved, did not write the DLA off or allocate director payments as a dividend. Anyway, when all is said and done, do I just pay 10% capital gains tax and enter it into box 13 on the SA?
     
    Posted: Jun 14, 2019 at 11:37 PM By: BusyBeeBee Member since: Jun 30, 2018
    #5
  6. Mr D

    Mr D UKBF Legend Free Member

    14,176 1,553
    You sold the company?
     
    Posted: Jun 15, 2019 at 12:48 AM By: Mr D Member since: Feb 12, 2017
    #6
  7. BusyBeeBee

    BusyBeeBee UKBF Newcomer Free Member

    11 0
    No, I closed it and it was dissolved but there was an overdrawn director’s loan and the company never called it in or wrote it off. Plus a loan in the company name that I’ve personally been paying. I’m unsure where or if even it goes on my personal self assessment tax return.
     
    Posted: Jun 15, 2019 at 8:40 AM By: BusyBeeBee Member since: Jun 30, 2018
    #7
  8. Mr D

    Mr D UKBF Legend Free Member

    14,176 1,553
    Then its personal untaxed income for overdrawn directors loan account. Taxed at 20%, 40% etc.
     
    Posted: Jun 15, 2019 at 10:11 AM By: Mr D Member since: Feb 12, 2017
    #8