Dividend timing - o/d DCA

[Alcosaint]

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?

[section 44]

I don't see how HMRC could deem a dividend to have been declared.