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Readers' forum: Awkward customer

05 March 2019
Issue: 4686 / Categories: Forum & Feedback
Adviser’s responsibility towards an indebted client.

I have a client whose company is facing financial difficulties. When I prepared interim accounts I saw that his current account was overdrawn and there was insufficient profit to vote a dividend to clear the deficit.

I suggested that he should refrain from paying himself any more money until the company has balanced the books and starts making a profit. He has taken no notice and clearly he has to draw enough money from the company to sustain himself. The situation is that he now owes even more money to the company at the year end and it is not possible to clear the account either with a vote of a dividend or salary.

He has carried on drawing since the year end. Clearly it is necessary to declare a taxable benefit and to pay tax under CTA 2010 s 455.

My question for readers is whether...

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