Directors’ overdrawn loan accounts and repayment of section 455 tax

If a director’s loan account has been repaid and the previous section 455 tax can be reclaimed (25% of the amount ‘loaned’ up to 5 April 2016, 32.5% from 6 April 2016) there is a time limit of four years from the end of the accounting period to make the claim.

As HMRC do not record on the self-assessment account for companies the split between ‘normal’ corporation tax and ‘sec 455 tax’ the company must keep good records of the sec 455 tax paid and set up the corresponding debtor so it is not overlooked.  Don’t just assume it is additional corporation tax and write it off to profit and loss!