Revenue keep a keen eye on directors loans to ensure they are not salaries or emoluments in disguise.
A case was recently determined by the Tax Appeals Commission on this issue which Revenue lost.
Generally, for a payment to be considered a loan to a director, it must be clearly documented as such when the loan is granted and there must be a clear intention of repayment.
So a company should ensure when a loan is being provided to a director, there are board minutes and agreements in place to prove it is a genuine loan if later questioned by Revenue.
Where a loan is being repaid to a director, a company again should have board minutes and agreements to support the payment. In the absence of documentation, Revenue will assume it is remuneration and it will not be possible to reclassify the payment then.