HMRC has started contacting tax agents to check whether companies correctly claimed relief relating to directors’ loan accounts. The letters ask agents to review filings where relief from tax was claimed on the basis that a loan to a participator would be repaid within the permitted timeframe. If the anticipated repayment did not occur, agents are being asked to help clients correct returns and settle any resulting liabilities.
The focus is on company tax returns that reduced or reclaimed the temporary charge on loans to participators, often applied where balances were expected to be cleared after the year end. HMRC’s outreach follows earlier compliance activity on directors’ loans, including “one-to-many” letters and updates in recent Agent Updates, signalling sustained attention on this area.
Companies and their advisers should confirm whether repayments were actually made, verify dates against the statutory window, and ensure disclosures align with the final position. Where errors are identified, voluntary amendments can limit interest and potential penalties. Keeping clear audit trails for repayments, write-offs, or novations, and reconciling year-end positions to subsequent events, will help support any HMRC review.
Clients with outstanding directors’ loan balances, or historic claims based on expected repayments, should speak to their adviser promptly to assess exposure and agree next steps.
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