Reply to: Loan to a sole proprietor who is abroad

[lilelvis2000]

I'm just following this...How to pay the least tax closing a limited company :: Contractor UK

[northernladuk]

I will get a proper loan agreement. There is a chance that his company could be converted to a partnership - but that's probably not possible with a Ltd. co.

I'm winding up as I'm moving abroad.

It would seem that it's better to get the cash down to £25k and wind up and withdraw as assets.

Without committing tax evasion...

[northernladuk]

Louisa and Neil seem to be new around here. Give them a few years and they'll both be as cynical as the rest of us.

Louisa ain't new.. She's pulling our plonkers the sneaky devil!!!

Neil however looks like a nice fresh newbie! Anyone clarified his stance on Gladiators yet?

[lilelvis2000]

I will get a proper loan agreement. There is a chance that his company could be converted to a partnership - but that's probably not possible with a Ltd. co.

I'm winding up as I'm moving abroad.

It would seem that it's better to get the cash down to £25k and wind up and withdraw as assets.

[Louisa@AardvarkAccounting]

Louisa and Neil seem to be new around here. Give them a few years and they'll both be as cynical as the rest of us.

[Louisa@AardvarkAccounting]

Surely all you are doing is aiding and abetting his dodgy dealings by trying to make it plausible?

I was trying to give them the benefit of the doubt.

[TheCyclingProgrammer]

Where as I am loving the professionalism of our accountant posters are you not tempted to tell him shifting his money abroad and then shut the company is a really stupid thing to do and will have repercussions?

Surely all you are doing is aiding and abetting his dodgy dealings by trying to make it plausible?

Louisa and Neil seem to be new around here. Give them a few years and they'll both be as cynical as the rest of us.

[SlipTheJab]

What are the legal issues if I were to loan several £'s to a sole proprietor in a foreign country.

How would that look if a few months later I was to wind up my Ltd co.

Several pounds is fine, it's once you go above a tenner its starts to become a headache

[northernladuk]

Where as I am loving the professionalism of our accountant posters are you not tempted to tell him shifting his money abroad and then shut the company is a really stupid thing to do and will have repercussions?

Surely all you are doing is aiding and abetting his dodgy dealings by trying to make it plausible?

[TheCyclingProgrammer]

I would ensure there is agreement in place for this loan also, so this is formalised in writing.

Can't imagine OP would want to formalise their dodgy tax evasion scheme.

[TheCyclingProgrammer]

In short, I would imagine it would cause problems.

I would imagine the loan would be treated as if it was made to you (who then personally loaned the money to said sole proprietor) unless you had some formal loan agreement in place between YourCo and sole proprietor. If treated as a director's loan, one would then imagine that said loan would need to be paid off by way of dividend before shutting up shop, or by the sole proprietor if there is a loan agreement.

If money does not exist to repay the loan then I think you start getting into insolvency territory but that's beyond my knowledge.

[Neil@Intouch]

Loan from Ltd Company

All creditors & debtors are required to be paid/written off before the company can close. As Louisa states no relief would be given for writing this loan of when the final accounts are prepared.

I would ensure there is agreement in place for this loan also, so this is formalised in writing.

[stek]

What are the legal issues if I were to loan several £'s to a sole proprietor in a foreign country.

How would that look if a few months later I was to wind up my Ltd co.

I love these!

[Louisa@AardvarkAccounting]

Without knowing all of the circumstances and details behind this...

If the loan was given to a connected person or company, then you were to wind up the company, it's likely that you will not be able to claim and corporation tax relief for the write off of any outstanding loans.

As for the legal issues then you'd want to draw up a loan agreement between the parties which outlines the terms of the loan and make sure the accounts reflect this.

[LondonManc]

What are the legal issues if I were to loan several £'s to a sole proprietor in a foreign country.

How would that look if a few months later I was to wind up my Ltd co.

You mean if the loan defaulted?

How dodgy do you think it would look?