Readers’ forum: Tax implications if loan is repaid in accounting period

My client’s company has just received a very large fee for work done and is cash rich.

My client also has substantial funds but all on time deposits that he cannot access immediately.

He would like to bridge the temporary liquidity problem with a loan.

I know that the consequences of a director’s loan are the potential taxable benefit and the corporation tax charge; but if he undertakes in writing to pay interest to the company at the official rate and makes sure that the loan is repaid to the company within nine months of the end of the accounting period in which it is made to him is there any tax problem? Would it even need to be reported anywhere?

Query 20 509 – Borrower.

If the load is not fully repaid in nine months there will be a s 455 tax liability....