Directors' / Owners' Loan Account
Any transaction recorded using Personal affects the Directors' / Owners' Loan account (DLA). Review the balance on the DLA - visible at Accountant, View ETB prior to filing the IFA report.
You or your company may have to pay tax if you take a director’s loan.
Your personal and company tax responsibilities depend on how the loan is settled. You also need to check if you have extra tax responsibilities if:
the loan was more than £10,000 (£5,000 in 2013 to 14)
you paid your company interest on the loan below the official rate
.
If there is a Credit balance on the
DLA it signifies that the company owes that amount to its Director(s).
If the IFA Report
Net Assets (
Balance Sheet Net Assets less the report tax accrual) are less than the
capital adequacy requirement there may be a need to supplement the net assets.
Do this by subordinating some or all of the credit balance on the DLA account. Certain formalities may need to be completed to implement the subordination. The subordination is not directly recorded in the system. When the IFA report is run there is a box in section D1 that allows the subordination to be recognised. Essentially by subordinating part of or the entire DLA loan account there is an agreement to allow creditors to be paid prior to paying the subordinated DLA balance. The subordinated amount is used to increase the capital resources of the business.
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