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Where Taxpayers and Advisers Meet

Ltd company tax / directors loan question....

cag83
Posts:1
Joined:Sun Sep 29, 2019 5:58 pm
Ltd company tax / directors loan question....

Postby cag83 » Sun Sep 29, 2019 6:58 pm

Hi folks,

First time poster with a bit of a long winded question so please be gentle! Can anyone advise on the situation outlined below? Apologies if not worded correctly or if posted in wrong section.

Director 1 paid for BTL property cash from personal account, purchased in name of company 1.

Director 1 and 2 made profits from ‘flipping’ properties in company 2. One property still owned in this company, which is on the market now

Director 1 had to be removed as director of company 1 in order to refinance onto BTL mortgage (due to his ex pat status) Director 2 is now sole director of company 1

Director 2 is sole director of company 3, which is about to purchase 4 properties with money coming from company 2 as a loan. The remaining money will have to come from director 2 personally, however director 2 will need this money back ASAP. Money cannot be released from the 4 properties until June 2020

Would it be ok for director 2, to put the money into company 1 or 2 and that company to loan it to company 3? Then when company 1 or 2 have the funds (from the BTL refinance in company 1 or the sale of the property in company 2) director 2 can be paid back the loan amount?


AdamS93
Posts:268
Joined:Tue Sep 26, 2017 6:28 pm

Re: Ltd company tax / directors loan question....

Postby AdamS93 » Mon Sep 30, 2019 10:36 am

Sounds like you are getting in a mess with large sums of money at stake. Now is definitely the time to get professional advice before it is too late.

jerome.lane
Posts:237
Joined:Mon Aug 12, 2019 8:41 am
Location:Sandhurst, Berkshire
Contact:

Re: Ltd company tax / directors loan question....

Postby jerome.lane » Tue Oct 01, 2019 7:59 am

Provided you have commercial loan agreements and accurate records of the transactions, there shouldn't be an issue with this. Potential problems arise if Directors owe money to companies or if a Director is regarded as not managing a company in its best interest (i.e. to further their own other business interests). There are some flexible commercial lenders out there or Directors could look at the companies borrowing from pensions as alternative solutions. Good luck!
Jerome Lane
Tax Adviser
Telephone: 07943 005902


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