Discussion
My LTD company was dormant for a while until the tail end of last year.
At that point, the director loan account owed by about £8k.
Does the £8k used to pay the director loan account back down to zero qualify for corporation tax, or is it not that simple?
I'm struggling to find anything on HMRC's website to cover this angle.
At that point, the director loan account owed by about £8k.
Does the £8k used to pay the director loan account back down to zero qualify for corporation tax, or is it not that simple?
I'm struggling to find anything on HMRC's website to cover this angle.
I don't exactly understand what you mean by "qualify for Corporation Tax".
Essentially, it seems you either loaned money or gave items of value (fixed assets, stock etc) to the company in the past meaning that by the time that the company had ceased trading it owed you £8,000 back.
During the time the company was trading any money you loaned to the company would not have been subject to Corporation Tax because it was not "income" in the hands of the company. Just because money ends up in a company bank account does not automatically mean it is income that needs to be taxed. It was a loan - and the nature of a loan is that the amount loaned will need to be paid back - that is why loan income is not (normally) looked on as taxable income.
Also, as and when the company pays what it owes back to you, this money is not income in your hands either - so you will not be liable to any personal Income Tax
So, in theory, the company should be able to pay back to you what it owes to you - as soon as it has the funds to do so. Don't forget however, that a company has primary obligations to other entities it may owe money to before it can clear debts owed to directors.
Essentially, it seems you either loaned money or gave items of value (fixed assets, stock etc) to the company in the past meaning that by the time that the company had ceased trading it owed you £8,000 back.
During the time the company was trading any money you loaned to the company would not have been subject to Corporation Tax because it was not "income" in the hands of the company. Just because money ends up in a company bank account does not automatically mean it is income that needs to be taxed. It was a loan - and the nature of a loan is that the amount loaned will need to be paid back - that is why loan income is not (normally) looked on as taxable income.
Also, as and when the company pays what it owes back to you, this money is not income in your hands either - so you will not be liable to any personal Income Tax
So, in theory, the company should be able to pay back to you what it owes to you - as soon as it has the funds to do so. Don't forget however, that a company has primary obligations to other entities it may owe money to before it can clear debts owed to directors.
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