DLA Solicitors

If you have borrowed money from your business and are unable to repay the loan, this can result in serious consequences. In recent years HMRC have clamped down on a previously relatively unregulated Directors loans account. There are now strict rules and guidelines in place detailing how directors should manage their DLA. A Directors’ Loan Account is a record of all transactions between a business and the director(s). All money taken or given outside of a normal salary contribute to the DLA. A Directors Loan is often not an issue until a company enters liquidation when tax implications and personal liability may make a DLA an issue.  Directors and Business are two individual entities and as a result, the company bank account must not be treated like a personal account.

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Managing Business Borrowings Responsibly

Borrowing money from your own business can seem like a convenient solution, but failing to repay these loans can lead to significant consequences. In recent years, HM Revenue and Customs (HMRC) has intensified its scrutiny of Directors Loan Accounts (DLA), turning what was once a relatively unregulated aspect of business finance into a highly regulated area. This shift has introduced strict rules and guidelines governing how directors should manage their DLAs, and understanding these regulations is crucial for responsible financial management.

What is a Directors Loan Account (DLA)?

A Directors' Loan Account serves as a comprehensive record of all financial transactions between a business and its director(s). It encompasses all money exchanged outside of regular salaries and wages. Essentially, it tracks any funds borrowed by the director from the business or funds provided by the director to the business.


DLAs are often not a concern during the operational life of a company. However, they can become a critical issue when the company faces liquidation. This is when the tax implications and personal liability associated with a DLA can escalate, potentially leading to financial difficulties for the director and legal repercussions for the business.

Discuss your case with our Solicitors

Our team of experienced solicitors is always on hand to help guide you in the right direction and provide legal expertise in DLA matters.

Directors and Businesses: Distinct Entities

It's important to recognise that directors and businesses are distinct legal entities. The company's bank account should never be treated as if it were a personal account for the director. Failure to maintain this separation can result in confusion, financial mismanagement, and, ultimately, legal consequences.


At GMD, our solicitors understand the complexities and challenges associated with Directors Loan Accounts. Our expertise can assist you in navigating the rules and guidelines governing DLAs, ensuring that your financial practices are compliant and responsible. We can help you:

  • Establish proper record-keeping procedures for DLAs.
  • Understand the tax implications and personal liability associated with DLAs.
  • Develop strategies to address DLAs in the event of company liquidation.
  • Ensure that your business's finances are managed in a manner that upholds legal and regulatory standards.

Directors Loan Accounts are an integral part of business finance that requires careful management and compliance with regulations. At GMD, we are here to provide the guidance and support you need to navigate the complexities of DLAs, protect your financial well-being, and uphold the legal and ethical standards expected of business directors.

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