Company Loans Golborne

You do not give sufficient information for a full answer so this can only be very general advice. I suggest you seek the advice of a chartered accountant if you do not already have one.

You need to explain the full circumstances behind the loan including whether there was a formal loan agreement, what security, if any, was offered, how much was advanced, the exact relationship between the two companies, whether there were any joint shareholders (other than yourself) and your shareholding in both companies. You will also have to explain the circumstances behind the company being dissolved and whether the loan or part of it was repaid and if not why not.

There are a small number of ways money can be taken out of a limited company so that any taxation is properly accounted for. Dependent upon the answers to the above questions, HM Revenue & Customs may regard the loan as a debit to your director’s loan account and seek tax and penalties where appropriate. An overdrawn director’s loan account is illegal under the Companies Act. If it pushes the loan account over £5,000 overdrawn, there are P11d interest repercussions and any balance outstanding at the year end can attract Corporation Tax at 21 per cent.

For that reason I suggest you take appropriate professional advice as soon as possible.

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