Over the last 3 to 4 years we have noticed an increase in the number of cases where there is an overdrawn director’s loan account or dividends have been drawn illegally.
Now it is understandable that directors wish to be remunerated in the most tax effective way and commonly they will be advised to pay a minimal salary and then draw the balance as dividends. This advice is absolutely fine whilst the Company is making profits and has distributable reserves.Continue reading