I have two directors who has resigned but they owe the company’s money. They are unlikely to pay back. The rest of the current directors have agreed to write off the debts. How to I record the transaction and how is the tax treatment on this?
Hi, you would write off to the bad debt nominal (so DR bad debts CR DLA), however it would be disallowed in terms of the CT calculation. There can be other issues with writing off directors loans and you would be best to seek the advice of your company accountant.
Hope that helps.