Mark McLaughlin looks at ‘close’ company overdrawn directors’ loan accounts and tax liabilities under the ‘loans to participators’ rules, following HMRC enquiries.
Enquiries by HM Revenue and Customs (HMRC) involving businesses often extend to the business owners themselves. Tax return adjustments can occur, even for honest business owners.
HMRC categorises business profit irregularities as ‘non-extractive’ or ‘extractive’.
Non-extractive adjustments
Non-extractive irregularities are broadly understatements of profits or excess tax relief claims not involving funds being taken out or diverted from the company.
For example, non-extractive amendments to profits might arise through private use adjustments (for sole traders or partners), or disallowances due to innocent
