Loan written off: are you in HMRC’s crosshairs?
HMRC is writing to directors that took a loan from their company that was later written off or released. What should you do if you receive a letter?
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Accounting for VAT if there is no cash payment
Your business has submitted repayment returns for the last two quarters and you are concerned that you might have underpaid output tax on some supplies where no money has changed hands. Are your concerns justified?
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Treatment of distributions under review
The government has launched a consultation on modernising the tax treatment of distributions and repayments of capital by companies. The proposals could affect the distinction between dividends taxed as income and capital payments subject to CGT. What changes are being considered?
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Tax relief on equipment you haven’t paid for (yet)
The timing of tax relief for purchases of equipment isn’t straightforward when payments are delayed or goods are purchased through hire purchase (HP) agreements. How can you use these rules to your advantage and get tax relief before you’ve paid the final invoice?
The letters are being sent to taxpayers who:
- had a director’s loan that was written off or released between April 2019 and April 2023; and
- did not declare the amount as income on their self-assessment tax return.
The amount released or written off is treated as an income distribution and is taxable at the appropriate dividend rates. If you do need to pay extra tax you can tell HMRC by using the digital disclosure service. This service can be used even if the loan was written off or released before April 2019, but for loans released or written off since 6 April 2023, you can simply amend your tax return to reflect the additional income.
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