The HMRC expects companies to keep accurate and up to date accounting records especially details of transactions between a company and its directors – the “directors loan account” (DLA).
Where you use software to keep your financial records you can set up a DLA in the way you would a bank account and post transactions to it. Alternatively if you keep manual records you can use a simple spreadsheet of ins and outs similar to the example below.
Director’s name ………………………………………………………..
| Date | Description of transaction |
Debit |
Credit |
Loan account balance |
|
06/04/2012 |
Opening balance |
£0.00 |
||
|
06/04/2012 |
Director’s personal drawing |
£500.00 |
(£500.00) |
|
|
30/04/2012 |
Dividend paid for year ended December 31 2010 |
£5,000.00 |
£4,500.00 |
|
|
05/05/2012 |
Advance expenses paid |
£250.00 |
£4,250.00 |
|
|
21/05/2012 |
Expenses claim submitted |
£228.50 |
£4,478.50 |
|
Source: Indicator