Directors loan debit

K

kennyb3

Registered User
Messages
269
Debit not greater than 10% of net assets.

Grossing up and paying income tax on CT.

The Ct return is late so surcharge (10%)

However the loan is then repaid early the following year.

Do you a) amend the previous CT return or b) reclaim the tax on the next CT return and lose the surcharge paid over?
 
kennyb3 said:
Debit not greater than 10% of net assets.

Grossing up and paying income tax on CT.

The Ct return is late so surcharge (10%)

However the loan is then repaid early the following year.

Do you a) amend the previous CT return or b) reclaim the tax on the next CT return and lose the surcharge paid over?
Click to expand...

When I read your question I started out thinking that surely there would be a means of getting back the surcharge on the income tax. Unfortunately though it looks like they're stuck with the surcharge on the original amount.

If you look at S.1084(2)(a) it's quite clear that the surcharge applies to the amount of income tax arising under S.239 & S.438.

The mechanism for relief provided under S.438(4)(a) is that where there is a repayment or partial repayment of the loan, "relief shall be given from that tax by discharge or repayment". The original assessment still stands as I understand it, so the amount of surcharge originally applied is still correct.
 
My understanding is that you will get the tax refunded by amending the CT1 for year in which the tax was paid over. This will have the impact of reducing the company's tax bill (including the income tax on on the loan) and will reduce the surcharge. I haven't done this in a number of years but that was the way the last time I did it.
 
You must log in or register to reply here.
Back
Top