Director Loan - Debt Recovery?

[MaryPoppins]

Hi all

As I've previously mentioned, my Ltd Co has two directors. The other director took a directors loan of £18k in January, from funds allocated for Corp Tax due in December.

Said director has now more or less disappeared, and it is fairly obvious the £18k (plus interest) will not be repaid. The immediate concern is that the company will be unable to fully pay the CT. I am already talking to HMRC about this to ensure they are aware of the situation, and they will probably allow the defecit to be repaid in installments.

Is it worth selling the debt to a recovery company - I am not in a position to repay this debt, and frankly, don't see why I should.

Grateful for any thoughts!

[Pondlife]

Since it's no small amount I would recommend paying for professional advice on this.

I would start with your accountant and then a solicitor.

It's worth doing properly IMO.



Sorry to hear BTW.

[MaryPoppins]

Since it's no small amount I would recommend paying for professional advice on this.

I would start with your accountant and then a solicitor.

It's worth doing properly IMO.



Sorry to hear BTW.

Ta - am speaking to accountant tomorrow and will ask his advice, but I think he will agree that recovering the debt is the only way to go now.

[pmeswani]

Ta - am speaking to accountant tomorrow and will ask his advice, but I think he will agree that recovering the debt is the only way to go now.

Questions you may need to bear in mind.

1. Do you know for certain if the said director is still living in the UK?
2. If you answered yes to 1, do you know where he lives?
3. If you answered yes to 2, send an invoice to the said director and don't forget to add the appropriate interest and state that the said director has 14 days to pay or legal proceedings or debt recovery will commence.

However, you should speak to an accountant and solicitor before carrying step 3.

[DaveB]

He will also be liable for Income tax on the amount taken ( at his higher tax band ) if it is not repaid in time and since you are already talking to HMRC ...

[Pondlife]

Had a quick search for you and came across this from one of the resident accountants.

http://forums.contractoruk.com/881411-post7.html

Maybe a new approach. I understand this doesn't get you the cash back but it will reduce what's owed to hector.

[MaryPoppins]

He will also be liable for Income tax on the amount taken ( at his higher tax band ) if it is not repaid in time and since you are already talking to HMRC ...

They have advised that if the loan is repaid within nine months of the end of accounting period (which is Dec), no tax is payable. However if the loan is not repaid within nine months of end of financial year, tax of 25% of the remainder of the loan must be paid, i.e a further 4.5k.

I just don't want to be liable for repaying his debt as part of unpaid CT. When HMRC offer a repayment plan, he will probably ignore it (as per) which will leave me to repay HIS debt, as he knows I have more at stake.

All very worrying but not unexpected given everything else he's done to date!

[MaryPoppins]

Had a quick search for you and came across this from one of the resident accountants.

http://forums.contractoruk.com/881411-post7.html

Maybe a new approach. I understand this doesn't get you the cash back but it will reduce what's owed to hector.

Thank you! A little over my head , but I will show accountant, thanks again.

[Menelaus]

PM'd you.

[Zippy]

Bugger

Keep chasing but try not to worry too much ....