Directors overdrawn loan accounts
These are debts due to the company and the directors will be asked to repay them.
Directors can borrow loans from their company. As long as the loan is paid back within nine months the debt will be tax free.
When a company enters an insolvency procedure the IP will look at the last set of accounts to see what the position was with the Directors Loan Account.
They will then look at the company’s records and ask the company’s accountants for details regarding the movement since those accounts to the date of insolvency.
If the directors have an outstanding loan account the IP will have to write to the director asking them to pay back the loan.
Depending on the circumstances the IP may have to take formal recovery proceedings against the director to recover the debt due to the company.