Key points
- Simplify, organise, disclose.
- Never conceal liabilities.
- Director's loans can have tax consequences.
- Unused assets and dormant companies add complexity.
Cleaning up a business means simplifying and organising it so that it can be understood quickly. It never means hiding liabilities or flattering results.
What typically needs attention?
- Dormant or unnecessary group companies
- Obsolete or slow-moving stock
- Old, irrecoverable debts
- Shareholder and director's loan accounts
- Personal expenses running through the company
- Undocumented arrangements with staff, family or related parties
- Unresolved disputes
- Assets the business no longer uses
- Incomplete company registers and filings
- Unnecessary structural complexity
Why do director's loans need attention?
Money owed to or by a director is usually addressed at or before a sale. Director's loans can have tax consequences for both the company and the individual, so take accounting advice on how to settle them.
This guide is general commercial information based on professional experience of UK SME transactions. It is not legal, tax, accounting or financial advice, and transaction-specific requirements vary. Take advice from appropriately qualified professionals before acting.
Sources
Rules and thresholds change. Check the current position at the source and take professional advice before acting. Citing official guidance is not a substitute for professional tax or legal review.