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Dividends to clear overdrawn directors’ loan accounts.
Last year I purchased a block of clients from another local accountant who had recently retired.
The practice was generally well run and I have no concerns about the quality of the work which was done other than in one regard which is starting to worry me.
He seems to have taken a relaxed attitude to the use of dividends to clear overdrawn directors’ loan accounts. I have seen several cases where the dividend clearly was not processed until well after nine months from the year end but was nonetheless used to clear the loan account and stop a s 455 charge.
Going forward I am obviously going to do things properly but what are my and my clients’ obligations about the past dealing in this matter?
Untangling all of this could take a huge amount of time ...
