Why HMRC is Contacting Agents About Directors’ Loan Accounts

HMRC has started a nationwide compliance review into how UK companies reported directors’ loan accounts (DLAs) in corporation tax returns filed before April 2025. This review focuses on cases where companies claimed relief for anticipated loan repayments that were expected to be made within the nine-month window after the accounting period ended. HMRC now believes that many of these repayments either did not take place or were made late, resulting in underpaid s455 Corporation Tax.

This is a large-scale campaign. HMRC is contacting tax agents representing around 4,000 companies, and the deadline for agents to respond is 28 November 2025. The letters ask agents to confirm details, check whether repayments actually happened, amend CT600 and CT600A returns where needed, and help clients pay any outstanding s455 tax.

At Apex Accountants, we help companies across the UK review their directors’ loan accounts, correct past filings, and respond to HMRC’s enquiries. DLAs are one of the most common triggers for HMRC checks, and this new campaign shows how closely HMRC is monitoring repayment timelines and accuracy of reported information.

Why HMRC Is Contacting Agents

Between April 2024 and April 2025, HMRC analysed corporation tax returns filed before April 2025 and identified patterns that raised concern. Many companies included:

• Repayment dates set in the future
• Relief claims for loan repayments that had not yet occurred at the time of filing
• No amendments even when the repayment date passed and the loan remained unpaid
• Partially repaid loans that had been recorded as fully repaid
  

HMRC has stated that this gap created a risk of tax loss because relief was being claimed on the assumption that a loan would be cleared before the nine-month deadline.
If the repayment did not happen, s455 tax should have been paid at 33.75%, but HMRC’s system had no automatic way to enforce this.

The issue has now been fixed. From April 2025 onwards, the CT600A online filing system does not allow companies to enter a repayment date that is in the future. Relief can only be claimed when repayment has already been made.

Because returns filed before April 2025 may contain incorrect anticipated repayment data, HMRC wants all affected cases to be reviewed.

The Legal Framework –  s455 Tax

Directors’ loan accounts fall under strict rules in the Corporation Tax Act 2010, particularly under section 455. A s455 charge applies when a close company lends money to a participator (usually a director or shareholder) and the loan is:

• Still outstanding at the end of the accounting period
• Still unpaid nine months after the year-end

Most small and medium-sized companies are classified as close companies. A “participator” is any person with a shareholding or significant interest.

The key points of s455 tax:

• The charge is 33.75% of the outstanding loan balance
• The tax is payable even if the company has no Corporation Tax liability
• The company can reclaim the tax only when the loan is fully repaid
• Relief and charges must be reported in CT600A
• Partial repayments reduce the charge proportionally

Because this tax applies to personal withdrawals structured as company loans, HMRC monitors DLAs closely.

Why Anticipated Repayments Are a Problem

Before April 2025, companies could claim s455 relief based on a repayment that had not yet happened, provided it was expected before the nine-month deadline. This led to situations such as:

• Company year-end: 31 December 2023
• Corporation Tax return filed: 1 August 2024
• Loan still outstanding at filing
• Expected repayment by 30 September 2024
• The company claimed relief immediately
  

This was allowed under old rules, but it created a compliance gap. If circumstances changed—cash flow issues, delays, or directors forgetting to repay—the return was usually not updated.

HMRC has identified numerous cases where:

• The repayment never happened
• Only part of the loan was repaid
• The repayment was made after the nine-month deadline
• The company did not amend its return
• The s455 tax was never paid.

By contacting agents and giving them a client list, HMRC is asking them to check all loan movements for accuracy. This includes reviewing bank statements, director current accounts, bookkeeping records, and loan schedules to confirm what actually happened.

HMRC’s Second Compliance Campaign Targeting Written-Off Directors’ Loans

Alongside the anticipated repayment review, HMRC is running a parallel campaign focusing on written-off or released directors’ loans between April 2019 and April 2023. Thousands of directors will receive letters directly from HMRC.

A written-off loan is treated as income. This can be taxed as:

• Employment income (subject to Income Tax and National Insurance)
• Dividend income, depending on the individual’s status and the company’s position

Directors who did not report these amounts on their personal self-assessment return risk penalties and interest. HMRC is directing these individuals to the Digital Disclosure Service to correct the position voluntarily.

What Agents Must Do Before 28 November 2025

HMRC’s letter to agents sets out specific instructions. Agents must:

• Email HMRC using the address provided in the letter
• Request a list of clients whose returns include anticipated repayments
• Contact affected clients
• Review all DLAs for the relevant accounting periods
• Confirm actual repayment dates and amounts
• Amend the CT600 and CT600A if repayments did not match what was reported
• Advise clients to make payments on account if extra tax is due

If the loan was not repaid by the nine-month point, HMRC expects full s455 tax at 33.75%, plus interest calculated from the original due date.

How Companies Should Respond Now

Companies whose agents receive HMRC’s letter must act quickly. Here is the step-by-step approach businesses should follow:

1. Review Directors’ Loan Accounts in Detail

Check all transactions involving directors or shareholders. Review:

• Loan withdrawals
• Repayments made
• Salary or dividend credits
• Journals posted to clear balances
• Adjustments made after year-end
• Any funds written off
• Timing of repayments relative to the nine-month deadline

Accurate DLA records are essential. Poorly recorded DLAs are one of the most common triggers for HMRC enquiries.

2. Compare Repayment Claims with Actual Repayments

If the company claimed an anticipated repayment, confirm:

• Was the loan repaid?
• Was it repaid in full?
• Was the repayment made by the nine-month deadline?
• Was the date entered in CT600A correct?
• Did the company rely on a credit journal rather than real repayment?

If the answer is no, the return must be amended.

3. Amend the CT600 and CT600A

Where claims were incorrect:

• The CT600A must be corrected
• The s455 charge must be recalculated
• Companies must pay additional tax and interest
• Future year DLA balances must be reviewed to prevent repeat errors

Amending promptly can reduce HMRC penalties.

4. Calculate Interest and Penalties

Interest starts on the original due date. Penalties depend on behaviour. HMRC may charge penalties where the company:

• Failed to take reasonable care
• Did not update the return when it knew repayment did not happen
• Incorrectly relied on credit entries rather than cash movement

Correcting voluntarily before HMRC opens a full enquiry usually reduces penalties.

5. Strengthen Future Reporting and Record-Keeping

Since April 2025:

• Companies can no longer enter future repayment dates
• Only actual repayments may be claimed
• Companies must maintain accurate DLA schedules
• Regular internal reviews are recommended

This prevents future HMRC challenges and reduces compliance risks.

How Apex Accountants Helps UK Companies

Apex Accountants supports companies across the UK with comprehensive DLA compliance and correction work. We provide:

• Full DLA reviews covering all transactions
• CT600 and CT600A corrections
• Step-by-step s455 tax calculations
• Analysis of written-off loans and personal tax impact
• HMRC enquiry preparation and representation
• Advice for directors on repayment strategies
• Dividend and salary guidance to clear DLA balances
• Monthly and quarterly DLA monitoring
• Xero digital bookkeeping setup
• Reliable support for SMEs, family businesses, and company groups

Our aim is to protect your business from unexpected s455 liabilities and reduce the risk of future HMRC intervention.

Conclusion

HMRC’s 2025 DLA campaign is one of the most significant compliance actions affecting UK companies this year. Thousands of businesses may face revised tax liabilities if anticipated repayments were claimed incorrectly. Taking quick action helps avoid penalties, reduce interest, and protect your company’s tax position.

Apex Accountants can review your directors’ loan accounts, amend returns, and guide you through every step of the process with clarity and accuracy. Book a free initial consultation with our tax accounting specialists!

Frequently Asked Questions

1. Why is HMRC checking directors’ loan accounts?

HMRC is reviewing directors’ loan accounts because many companies claimed relief on anticipated repayments that never happened. This creates unpaid s455 Corporation Tax. HMRC now wants agents to correct these entries, amend CT600A pages, and ensure the right tax is paid.

2. What happens if a director does not repay a loan within nine months?

If a director does not repay the loan within nine months of the accounting period end, the company must pay s455 tax at 33.75% of the unpaid balance. This tax becomes recoverable only after the loan is fully repaid.

3. Can HMRC require amendments to older Corporation Tax returns?

Yes. If a return included a repayment date that never happened or was incorrect, HMRC expects the company to amend the CT600A. HMRC can request corrections for several previous years, especially where relief was claimed inaccurately.

4. How do I correct a wrong anticipated repayment entry in CT600A?

To correct a wrong anticipated repayment claim, you must amend the CT600A, update the loan balance to reflect the actual repayment timeline, recalculate the s455 liability, and pay any additional tax and interest owed. Early correction reduces penalties.

5. What if the director’s loan was written off or released by the company?

A written-off or released director’s loan becomes taxable income for the director. It must be declared through Self Assessment as employment or dividend income. HMRC may charge interest and penalties if this income was not previously reported.

6. Will HMRC apply penalties during this 2025 compliance campaign?

Penalties depend on behaviour. If the company acted carelessly or failed to amend returns after missed repayments, penalties may apply. Voluntary correction before HMRC intervention usually reduces penalties and interest, helping companies settle the issue more easily.

7. Can companies still claim relief for anticipated repayments after April 2025?

No. HMRC removed the ability to enter future repayment dates from April 2025. Companies can now only claim s455 relief after an actual repayment has been made, ensuring accuracy and preventing tax loss caused by unfulfilled repayment expectations.

8. How far back can HMRC investigate directors’ loan account issues?

HMRC can review up to four years of returns under standard rules. Where they believe there has been careless or deliberate reporting, they can extend the enquiry window further. This includes checking repayment dates, written-off loans, and missing disclosures.

9. Do close companies need to monitor directors’ loan accounts monthly?

Yes. Regular DLA monitoring helps prevent overdrawn balances, missed repayments, journal errors, and inaccurate CT600A entries. Monthly checks reduce HMRC enquiry risks, support accurate reporting, and help companies plan repayments or dividends more effectively.

10. Should a director repay the loan or clear it with a dividend instead?

The best option depends on the director’s tax position and the company’s profit and cash flow. Repayment avoids further tax. A dividend may work if profits allow, but it creates income tax implications. Professional advice ensures the right choice.