Please excuse my ignorance here but I just wanted to put the following scenario forward and would appreciate some help
Ltd company Director transfers cash from his personal account into the business bank account as a loan to the Ltd Co. Ltd Co bank account is showing positive balance at the time of transfer no large bills going out at or around the
time of the transfer which may explain the need for a temporary cash injection from director. Director simply states that this needs to be recorded as a loan by director (him) and paid back by the Ltd Co at a future date. No interest to be charged on the loan.
Presumably I have to simply take the word of the director and treat the transaction as stated i.e. DR bank Cr DLA ?
Similarly, if the client has cash paid directly into business bank account and states that this is not sales income rather a loan by the director from his personal funds -can this be accepted?
Similarly, if the client has cash paid directly into business bank account and states that this is not sales income rather a loan by the director from his personal funds -can this be accepted?
Many thanks
How can it be a loan from the Director if a client paid it into the bank?
Matt, I assume the poster is meaning his client rather than his client's client.
If the amounts paid into the bank account are fairly sizeable then I would want to know their source, did they re-mortgage, take a personal loan, max out their credit cards? Bottom line is HMRC could well ask for proof so you are just letting the client know of a potential question. If you know the client is always pleading poverty and never pays any personal tax etc it could raise eyebrows. If you are just doing the bookkeeping I would still politely ask the question in a way that shows you being helpful, the accountant will almost certainly ask later anyway so you could have the answers and look efficient!
