HMRC has recently identified that some companies have arranged directors' loans and advances in order to avoid paying tax on the loans.

When the government's Finance Bill was published in March this year changes to loans made from a company to shareholders were outlined in it and legislation was finalised when the Finance Act became law on 17 July. However, the law applies to repayments of loans on or after 20 March 2013 and so has immediate effect. As is ever the case with understanding tax issues, it is extremely important that company directors understand the implications of the new rules fully, or risk being hit by an unexpected tax bill or investigation.