Some accounts I've just completed have a small overdrawn DLA, (purchases made through the Company that I disallowed) and also £100 worth of unpaid shares, so altogether circa £250. There is enough profit to cover this so how do I clear the DLA account? (VT Transaction)
No dividends have been taken as yet.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
You can either declare a dividend to clear the amount or you can check the current year DLA transactions and see if the amount has been repaid. If this is done within 9 months of year end there is no tax liability.
Good point Matt. I've removed my share capital part of my reply.
John,
the director can repay the overdrawn account either directly or you could withhold salary and / or use part of the use of home allowance to set it against in order to balance out the DLA without the need to declare a dividend when you state that you don't have the profits to support.
However, also remember that dividends do not require there to be current period profits, they only require profit so they may be issued against the retained profits brought forwards (if there are any. If the retained profits on the balance sheet show a loss then thats not an option).
kindest regards,
Shaun.
-- Edited by Shamus on Saturday 25th of July 2015 01:51:26 PM
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
the director can repay the overdrawn account either directly or you could withhold salary and / or use part of the use of home allowance to set it against in order to balance out the DLA without the need to declare a dividend when you state that you don't have the profits to support.
Use of home almost covers the overdrawn balance, so that's a big help. There is enough to declare a dividend, but I know the Director intends leaving the profits in the business for now.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
