Repayment of Directors Loan in 2.5 Months

[northernladuk]

I am still confused why 17k of last years divis is still in the OP's company bank account?

[eek]

I am still confused why 17k of last years divis is still in the OP's company bank account?

I don't know. There is a very slight possibility he could explain it to us but I think he has left - never to return.

I wonder if it was your comments that scared him off, or mine.

[fullyautomatix]

I am still convinced that this is exploitation of a loophole and misuse of visa. There is no entrepreneurship in this and its just a backdoor for people to come and do IT contracting. It seems everybody is just borrowing 50K for the brief period when the visa is being processed and then repaying it back. The fact that rules apply only when it comes to extension is a big loophole and I am sure when it comes to visa extension they will have some backdoor to exploit.

[Martin at NixonWilliams]

Yeah, I had a quick look and can't see that number stipulated anywhere. Accountant error?

Hopefully OP will share the reasons for their accountant's suggestion.

I have heard of some suggesting NMW over £7,696 as they believe it reduces their clients chances of getting an IR35 investigation - if only it was that simple!

[d000hg]

True enough but it is just too complicated to explain in posts so it is the right thing to say for all intents and purposes. At the end of month 10 where you can still make the 20K to cover the bill you could say all the money is yours yes but part way through that month you suddenly find yourself not being able to cover your tax bill on paper (and then added complication of not having enough to actually pay it etc). Just not good advice to consider it yours and not factor it IMO. Technically you are right though I guess.

Are you legally required to always have enough money to pay the tax bill based on accounts to date that year though? If you are, then my argument falls down... otherwise there is absolutely nothing wrong taking a loan of all the money set aside for CT, legally speaking. I think.

[d000hg]

I am still convinced that this is exploitation of a loophole and misuse of visa. There is no entrepreneurship in this and its just a backdoor for people to come and do IT contracting. It seems everybody is just borrowing 50K for the brief period when the visa is being processed and then repaying it back. The fact that rules apply only when it comes to extension is a big loophole and I am sure when it comes to visa extension they will have some backdoor to exploit.

You do have to have the £50k in your business to start with though.

[northernladuk]

Are you legally required to always have enough money to pay the tax bill based on accounts to date that year though? If you are, then my argument falls down... otherwise there is absolutely nothing wrong taking a loan of all the money set aside for CT, legally speaking. I think.

Good question. Hopefully one of our accounting friends will answer that. I thought you did to stop situations where your business suddenly folds or something unforeseen happens and the tax man is the first to lose his money. Would make sense as trading most of the year unable to pay your taxes introduces a huge amount of risk to that tax man.

[Old Greg]

Are you legally required to always have enough money to pay the tax bill based on accounts to date that year though? If you are, then my argument falls down... otherwise there is absolutely nothing wrong taking a loan of all the money set aside for CT, legally speaking. I think.

Don't know the answer, but even if you don't have the cash, you do have the asset (the loan).

[northernladuk]

You do have to have the £50k profit in your business to start with though.

I still think the OP has fudged his numbers using 17k that shouldn't be in the bank and committing his entire future years pay that he hasn't earned yet etc. I have a suspicion that the £12k could just be the tip of the mess the OP is in.

[northernladuk]

Don't know the answer, but even if you don't have the cash, you do have the asset (the loan).

Good point. Be interesting to know if it is any different for loaning that money and just divi-ing it out early with the idea the rest of the year will make it up.