PAYE Advice

I do not believe you can go back and resubmit a P14 for yourself for the tax year 2004/05 as this deadline has now passed. Therefore since your directors loan account is overdrawn I think the only way to bring your account back into balance is for the company to pay you a dividend. As this is an accounting adjustment this can be done retrospectively. Also there are tax advantages in receiving this extra remuneration by way of a dividend - ie you only pay NI on a dividend.

Hope this helps.

In order to give a full anwser to this question you need to provide more information.
You are a director. You suggest taking reward as a dividend. Are you also a shareholder?
If not are you related to somebody who is a shareholder?
Have the July 2005 accounts been signed off?
Is the year end 31 July or some other date in July?
What does your loan account stand at today?

For the moment.

1. You do not appear to have a liability under the benefit in kind legislation (cheap or interest free loan) as the loan has not exceeded £5,000.

2. A dividend cannot be backdated. It can only be credited to your loan account when it is made available. That can be a book-keeping entry but the entry cannot be back-dated. Back-dating transactions and / or documents amounts to fraudulent conduct.

3. Salary cannot be backdated either. However, as far as the company's corporation tax position is concerned, if the accounts for July 2005 have not yet been signed off you could still be in time to make a provision for a director's bonus in those accounts. The net bonus could be credited to your directors loan account in those accounts. The bonus would be deductible for CT purposes in CAP 31.07.05 but (as with the dividend) for IT purposes the bonus would be effective only from the time the bonus was made available (usually when the accounts are signed off).

What is the company's corporation tax rate in CAP 31.07.05? If nil then nothing is achieved by providing for a bonus in those accounts.


But the point which should concern you is the potential liability of the company under s419 ICTA 1988.

Before anybody can advise on this you need to provide the additional information.

I suggest your better course of action would be to find a local Chartered Tax Adviser.

See https://www.tax.org.uk