s419

[auzzie]

I'm a bookkeeper and have a balance sheet from the accountant to correct the records for the current year via, i assume, journals. I don't have a problem with that.
He has shown an amount for s419 as a debtor and a creditor, is that right? Doesn't it just cancel it out. Sorry i have never come across this before. All i know is that a s419 is a "tax" on an overdrawn directors account.
Where should these entries be made in the Nom ledger?

[buildersmate]

s419 relates to the transactions on a director's loan account. These certainly have to be stated in Notes to the Accounts, and there is potentially an assessment as a benefit in kind for loans to directors over a certain size and when repayment. But the assessment of future tax liability (if there is one) should show as an element of the personnel cost as a creditor.
As to the showing of the loan itself as both a credit and a debit in the Balance Sheet, then I don't understand it either - can you not ask the accountant?

[auzzie]

Thanks Buildersmate. The boss does not want me to communicate with the accountant as he has dispensed with his services! I also have a problem with a "loan" that has appeared on the balance sheet apart from the DLA.. I think i will not make any adjustments and let the new accountant sort it......if they can!

[minuteman]

You are right that a s419 deposit is a sum payable to the IR when a participator in a company has an overdrawn loan account. It is shown as a credit because the sum is due to the IR and this can be posted to Corporation tax payable. The other side of the entry is a debtor as the 'deposit' is repaid by the IR to the company when the loan account is cleared. This should be put to other debtors or set up a new account 's419 deposit'.

[auzzie]

Thank you minuteman, i'll do just that!