Corporate mistakes your business may have made

...and what you should do about them.

Corporate requirements can be fiddly and, sometimes, unintuitive. It is easy for businesses to trip up on corporate issues. In this series we look at 10 of the most common corporate mistakes companies make, and, more importantly, what they should do about them.

When does it happen?

A business seeks to help out an employee or director by giving them a loan, unaware that loans are heavily regulated by law. It may be that they wish to help with some urgent home improvements or assist them to pay for shares as part of an employee share scheme.

What mistakes are made? 

Proper legal or tax advice isn’t taken, and the loans fall foul of the (sometimes unexpected) legal requirements and/or the appropriate tax isn’t paid.

Why does it matter? 

The loans may be unenforceable, and your business may be in breach of the Financial Services and Markets Act 2000 and/or Consumer Credit legislation with (at least in theory) criminal consequences for your business and its directors. Your business and the employee may also end up with an unexpected tax bill.

What can you do about it? 

Take good advice (ideally before the loans are made). Certain loans are permitted, you just need to ensure that you jump through the necessary legal hoops! Businesses should also take proper tax advice to ensure they are making the loans with eyes wide open!

Interested in reading what other mistakes you business may have made? You can read the full article with #1 – 10 here.