Self-Employed – advice please!

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    We have a case where the customer was employed by a company. A year later he was offered a directorship within that company, and part of the condition of the directorship was that he purchased shares of 40%. He then had a loan of £7000 from the company to purchase the shares in the company (on the advice of the accountant). How do I treat this loan and the shares?

    He has received Director’s Loan Payments throughout the financial year that he will have to pay back if the company does not make any profit.

    I know Directors are treated as employees, but if he has a share of the company shold I get the accounts and treat 40% of the profit as his, or just treat any dividend he gets at the end of the year when the accounts are finalised as capital?

    also, how do I treat the director’s loan payments? He receives them through the year but will have to repay them if the company makes a loss. Do I offset this from any profit made?

    The customer does not have an ongoing claim, I am just looking to reduce an overpayment.

    Kevin D

    Is HBR 49(5) what you’re looking for?

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