Tax return - second opinion

[Peoplesoft bloke]

In the 2007-8 tax year I started my ltdco (nov 2007) , but took no income (no dividends or salary) as it was just starting. I did take a directors loan (£5k) as I needed some cash though.

My accountant says I don't need to make any reference to any of this on my tax return (I have this in writing). I'm a bit dubious, but I like their answer... what does the panel think?

[blacjac]

Did you pay the loan back?

If so then it's not income....

[Peoplesoft bloke]

I haven't paid it back yet, (but I'm not beyond 9 months after myco's y/e yet)

[pmeswani]

I haven't paid it back yet, (but I'm not beyond 9 months after myco's y/e yet)

Can you not declare it as / convert it to a Dividend by not taking any further dividends which covers the amount in question?

[Peoplesoft bloke]

Can you not declare it as / convert it to a Dividend by not taking any further dividends which covers the amount in question?

Yes I can, and I will. My question was really about whether I need to declare anything about my directorship on the 2007-8 return - I am starting to think my accountant is right and there's nothing to write about on there.

[Bob Jones]

There are two aspects of loans from your own company - one is the act of borrowing from your own company which can produce a corporation tax charge - the other is that the loan is likely to be interest free in which case there is a potential benefit and income tax charge - without knowing the full facts it is impossible to judge....if the £5000 in question is a genuine loan then I assume that this is recorded in the Company minutes .... HMRC will expect to see this - for information on the income tax charge see http://www.hmrc.gov.uk/manuals/eimanual/EIM26100.htm - for information on the corporation tax charge see http://www.hmrc.gov.uk/manuals/ctmanual/CTM61500.htm
Regards
Bob

[Peoplesoft bloke]

Thanks Bob, much appreciated.