Good day..
Possibly being too cautious, but here's the scenario: Client was an employee of 2 different companies in 11/12. Pay from Company A meant client was subject to HRT (40%), until leaving that employment late in 11/12 - no new employment has been found or is being sought, except as below.
Company B, unlike Company A, is controlled by my client. During 11/12 my client withdrew funds from Company B, to the extent that client had an overdrawn loan account at 5/4/12 - c£20k due to 1 large withdrawal. Having drafted Company B's 11/12 accounts it is clear that a dividend could now be declared to reverse the o/d loan account balance.
From an Income tax angle it clearly suits to declare the Company B dividend in 12/13 (treating the £20k as a loan until cleared by dividend) - PA and basic rate band already fully utilised in 11/12 through pay from Company A.
My question is this - does HMRC have any powers allowing it to treat the 11/12 withdrawal as anything other than a loan? And has anyone had experience of this actually happening?
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