‘Written off’ is one of those terms that can mean subtly different things to different people. That poses a challenge when there are tax consequences that hinge on whether and when a director’s loan account (DLA) balance is written off.

This is the question the Upper Tribunal recently had to grapple with in HMRC v Quillan [2026] UKUT 300 (TCC), which concerned the income tax charge payable by the director of a company in voluntary liquidation on an outstanding DLA balance.

Background

A close company is one controlled by five or fewer participators (typically, but not exclusively, shareholders) or by any number of participators who are directors.