Corporation Tax on Limited Company

Dear HMRC I have limited company from last 9 years. I had a restaurant business under this company for till 2018. I made loss in this restaurant and I gave directors loan to my this company and the company did not pay me the directors loan amounting £114000 till to date. The company accounts and balance sheet shows this Directors loan carried forward each year, my company has to pay me till to date. In 2022 i changed the name of my this company start doing consultancy business, the rest every thing company number remains the same. I earned £2000 pounds in fees received in my company account in 2022. Now when my accountant is making accounts please my question is: Can i take this £2000 from my company bank account paying back my directors loan before corporation tax? In this case the company pay my Directors loan before paying corporation tax, As the company is still in loss, not making any profit, so no corporation tax. Can i take this £2000 all from my company to my personal account, reducing my Directors Loan to £112000? Please what the HMRC rule says? Please answer me what is the right and lawful way in line with HMRC rules and I follow your direction.

Hi,
Any repayment of the loan by the company to the director has no impact on the profits subject to tax.  
The loan repayment is made out of taxed profits/loss and is not an expense that can be deducted from the company's turnover.
Thank you.

Thank you very much for the clarity.

Dear HMRC Admin, Thank you for providing clarity on my previous question. I have one more query regarding the company's name change and its impact on the directors' loan. Since 2014, my company was known as ABC, and it operated in the hospitality business. However, in 2022, I changed the name of the business to XYZ, while the company number and ownership (100% owned by me) remained the same and I did consultancy business. During the course of the business till 2018, I lent money to my company as directors loans and still an amount of £114,000 as a directors' loan is outstanding as shown in the company accounts since 2015. With the name change in 2022, the company still owes me this amount, and I have not received the repayment yet. Given that the company number and ownership have not changed, only the name has been updated, I believe that I am entitled to recover the full directors' loan of £114,000 from future years' net profits (after corporation tax deductions, as you kindly clarified). The name change should not affect the company's obligation to repay the directors' loan, as the company remains the same legal entity. I would appreciate your confirmation on my understanding. If I am indeed entitled to reclaim all of the directors' loan £114,000 from future years' net profits, I plan to do so whenever the company generates profits. Thank you for your assistance in clarifying this matter. I look forward to your response. Sincerely,

Hi CGTQ22,

Changing a companies name has no impact on the running of the business.
As you have stated it is the same entity with merely a name change, the accounts and computations for the period(s) in which
you loaned money will confirm the loan took place.

Thank you.

Dear HMRC Admin, Thank you very much for the clarity. Yes its the same company, same company number, just change in name as before it was a hospitality business and now its financial services business. Yes all the previous years and current year financial accounts on companies house also show, I gave Directors loan to my this company and the company still owes me around £112,000. Thank you very much for clarifying that I am entitled to receive my all directors loan in the future profits of my this Limited company.

The loan can be repaid when there is money in the bank. The loan has nothing to do with tax as it is a balance sheet item. Tax will be paid on any profits despite the loan.Tax will be on the profit even though the company is in debts. You can charge an interest on this loan that could eat up all or more of the £2k income per year. You need to declare this interest payment to HMRC. Kindly Anna 

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