We are preparing our client’s accounts to 28th February 2020 for a new client. We have noticed a large director loan debit balance, mainly due to a couple of vans that were in director’s name that were paid from the company. Can we backdate the agreement to 28th February 2020 for the sale of vehicles from director to the company, which will clear some of the director loans? 

Arthur Weller replies:  

If a shareholder borrows money from the company during the year, and still owes money to the company at its year end, there is a ‘section 455 charge’ on the company. See HMRC’s Company Taxation manual at. But if the loan is repaid within nine months of the company year end, then the company does not need to pay the section 455 charge. So it seems that you do not need to consider any backdating (I doubt whether this would be legal in any case).