UK Company or director to pay deposit for lease

[Rob Benjamin]

Hi all,

I came about a situation where a company wishing to expand needed to put a sizable deposit down on a property lease (which is 100% refundable), but the company would need investment in order to make the payment. Is it possible for the sole director of the Ltd company to pay the deposit personally rather than make a directors loan to the business and the business then make the payment.

The deposit is a security deposit incase the business didnt meet the rental payments and would otherwise be untouched and refunded at the end of the lease period.

I am not sure if this liability should show in the company accounts as there is a benefit arising from the payment (in that the lease would not be avaliable without the deposit).

Any advice is much appreciated.

 

[Rob Benjamin]

Just to give some further info on this, it is a bit of a question about the legitimacy around showing it as a liability for the company. Does this need to happen? Technically it makes no odds as it is still the directors investment paying the deposit but I am aware that the directors loan not showing on company accounts might be an issue. Please help, I can find no info about this type of situation!

 

[Rob Benjamin]

I guess I am wondering if this would in any way be a benefit to the company or if it would effectively be treated like a directors guarantee, but cash rather than contractual... If this were the case there would be no issue with it not appearing on balance sheet