This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Director Loan "bed and breakfasting"

TheMrs
Posts:24
Joined:Wed Mar 06, 2013 7:22 pm
Director Loan "bed and breakfasting"

Postby TheMrs » Mon Mar 06, 2017 6:46 pm

I am aware that if a further director's loan is taken within 30 days of a previous loan being repaid, or if there is the intention to take a further loan at the time of the repayment, then this is considered "bed and breakfasting" by the Revenue and tax under Section 455 will apply.

HOWEVER I read somewhere recently that "These provisions do not apply where the repayment itself gives rise to a charge to income tax, so where a dividend or salary/bonus has been used to repay the loan balance then these rules do not apply."

Is this true? I always repay DLs from dividends rather than with cash so this is pertinent and interesting, if indeed it is correct!

Does that mean that you can repay a loan from dividends and take a further loan at any time thereafter without S455 penalty? (With the proviso that the other rules around BIK and repayment within 9 months of year end etc still apply).

With thanks

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Director Loan "bed and breakfasting"

Postby bd6759 » Mon Mar 06, 2017 10:44 pm

Yes, as long as the credit comes direct from the same company and is credited directly to the loan account. You can't first take a payment into your own bank account (or in cash) and then transfer it back to the company. s464C CTA 2010.


Return to “Company Taxation”