Co-Director - Taking Co Funds. Advice?

[MaryPoppins]

I didn't realise that you had a small person en route.

1. Don't get stressed by this (any more than you have to, obviously)

2. Congratulations on the impending arrival.

Thank you! I am trying not to let this get to me, too much....

[Emigre]

Not without both of our consent unfortunately. Basically I am trying to work on the assumption he will take whatever is left in there now - he might not, but then again, he might. So if he does, will I be as liable as him?

As for shareholders, we're both equal...

Why not use whatever balance is still in the account to make a payment to HMRC now? I know you won't earn any interest on it but you're probably not getting much now and will get nothing if other director takes the funds.

At least the balance can then be used to partially offset CT liability?

I admit it goes against the grain to make voluntary payments to a sworn enemy but in this case I can't see how you can be faulted.

Congratulations on impending arrival.

[TykeMerc]

Why not use whatever balance is still in the account to make a payment to HMRC now? I know you won't earn any interest on it but you're probably not getting much now and will get nothing if other director takes the funds.

At least the balance can then be used to partially offset CT liability?

I admit it goes against the grain to make voluntary payments to a sworn enemy but in this case I can't see how you can be faulted.

Congratulations on impending arrival.

Sensible option and a good idea in these circumstances.

This sort of thing is why joint directors can be a major problem and why most of us work as 1 person Ltd Companies.

Best of luck on the impending project delivery Mary, have you found someone to accompany you in the delivery room?

[MaryPoppins]

Sensible option and a good idea in these circumstances.

This sort of thing is why joint directors can be a major problem and why most of us work as 1 person Ltd Companies.

Best of luck on the impending project delivery Mary, have you found someone to accompany you in the delivery room?

Thank you people, that's a great idea. I will make a lump payment to HMRC ASAP to ensure he can't get to it.

I wish with all my heart I hadn't got into this joint director business last year, it's been a mess from the start.

Just had it confirmed that although technically 5k is the maximum that can be taken as a loan, directors have been known to take more with little comeback. Not sure I like the sound of that, but hey ho.

However, where any loan is not repaid within 9 months of the end of the financial year in which the loan was taken, S419 tax is to be paid - think that's 25% of the loan amount. i.e. if he doesn't pay the full amounts back by Dec this year, the Company will be liable for additional tax.

Thanks again, am feeling a lot better about this now I'm armed with some information.

[MaryPoppins]

Sensible option and a good idea in these circumstances.

This sort of thing is why joint directors can be a major problem and why most of us work as 1 person Ltd Companies.

Best of luck on the impending project delivery Mary, have you found someone to accompany you in the delivery room?

Oh - and thank you TM. I will be accompanied by my mum and sister, which is adding up to be potentially hilarious...

[DaveB]

Thank you people, that's a great idea. I will make a lump payment to HMRC ASAP to ensure he can't get to it.

I wish with all my heart I hadn't got into this joint director business last year, it's been a mess from the start.

Just had it confirmed that although technically 5k is the maximum that can be taken as a loan, directors have been known to take more with little comeback. Not sure I like the sound of that, but hey ho.

However, where any loan is not repaid within 9 months of the end of the financial year in which the loan was taken, S419 tax is to be paid - think that's 25% of the loan amount. i.e. if he doesn't pay the full amounts back by Dec this year, the Company will be liable for additional tax.

Thanks again, am feeling a lot better about this now I'm armed with some information.

I'm not sure it's the company that becomes liable for the extra tax, but him. Since the company should already have paid CT on it, but he has effectivly taken it as undeclared income and so becomes liable for personal taxation on it. I could be wrong though, IANAA.

I'm sure HMRC would not look favorably on excessive directors loans should an official complaint be made by a shareholder.

Oh - and thank you TM. I will be accompanied by my mum and sister, which is adding up to be potentially hilarious...

The hormone levels in that room are going to be truly terrifying

[MaryPoppins]

I'm not sure it's the company that becomes liable for the extra tax, but him. Since the company should already have paid CT on it, but he has effectivly taken it as undeclared income and so becomes liable for personal taxation on it. I could be wrong though, IANAA.

I'm sure HMRC would not look favorably on excessive directors loans should an official complaint be made by a shareholder.



The hormone levels in that room are going to be truly terrifying

Ooh I hope your first comment is right. A taxation site I just went on did mention the additional tax liability in relation to CT, which sounded a bit odd. I would have thought it should be charged as income tax too seeing as how it's been taken.

I am certainly not going to be adverse to taking this further, should the full amount (and interest) not be repaid by Dec 2009. I think that's fair.

Ha, it is certainly going to be hilarious! The hospital tour was bad enough, with my Mum getting tears in her eyes at the sound of newborns crying.

[ASB]

Ooh I hope your first comment is right. A taxation site I just went on did mention the additional tax liability in relation to CT, which sounded a bit odd. I would have thought it should be charged as income tax too seeing as how it's been taken.

I am certainly not going to be adverse to taking this further, should the full amount (and interest) not be repaid by Dec 2009. I think that's fair.

Ha, it is certainly going to be hilarious! The hospital tour was bad enough, with my Mum getting tears in her eyes at the sound of newborns crying.

- Good luck with junior.

- If the loans are not repaid within 9 months of the year end then the additional tax is payable as CT @ 25% by the company. It has to be entered etc on it's CT return.

- You seem to have been advised that they can take the money. I think this is beyond their powers but could depend upon a whole manner of things. If they can do this then by the same powers you can behave in thew same way. Perhaps by opening another company account with you as sole signatory and transferring all the money there.

- Come the fallout if the company cannot pay its bills to HMRC etc they will take proceedings to recover. This may involve disqualification procedures amongst other things. Further if there is any question of wrongdoing (and it would appear likely) then the directors responsibility will be joint and several. The impact of this is that you may well end up liable for the CT debts jointly and they can go for whichever is the eaisier target.

- Unless you have a substantial sum tied up I think you need to be considering carefully whether you want to be a director of this enteprise or not. Cutting and running may be your best option.

[ASB]

Another point with regard to those loans....

The general taxation position is such that the company pays 25% of the loan value as tax if it is outstanding 9 months after the year end. This is then reclaimed if/when the loan is repaid.

If the loan should happen to be written off then the individual is assessed to income tax in the year in which it is written off.

What I am unsure of is the overall position should it be outstanding, taxed to the company, and the subsequently written off. It wopuld not surprise me if this ends up meaning the CT paid by the company was not reclaimable.

[MaryPoppins]

- Good luck with junior.

- If the loans are not repaid within 9 months of the year end then the additional tax is payable as CT @ 25% by the company. It has to be entered etc on it's CT return.

- You seem to have been advised that they can take the money. I think this is beyond their powers but could depend upon a whole manner of things. If they can do this then by the same powers you can behave in thew same way. Perhaps by opening another company account with you as sole signatory and transferring all the money there.

- Come the fallout if the company cannot pay its bills to HMRC etc they will take proceedings to recover. This may involve disqualification procedures amongst other things. Further if there is any question of wrongdoing (and it would appear likely) then the directors responsibility will be joint and several. The impact of this is that you may well end up liable for the CT debts jointly and they can go for whichever is the eaisier target.

- Unless you have a substantial sum tied up I think you need to be considering carefully whether you want to be a director of this enteprise or not. Cutting and running may be your best option.

Thanks, something to think over there. The main reason I haven't resigned yet is because I was thinking that with CT still outstanding, I should hang around to ensure it's paid. My concern is that cutting and running at this point will not render me any less liable...?

Agreed that in theory I should be able to take the money, in the same way that he is "able" to. I am not sure this sits easily with me really though. I would be much happier to pass it to HMRC as an early tax payment, which I am looking at.

Cheers though..