Directors’ loan accounts: the common pitfalls

Welcome to Ashfords’ accountancy bulletin, focusing on the legal and regulatory issues relevant to the sector. In this quarter’s edition we:

Detail the pitfalls of operating a director's loan account.
Outline guidance for accountants when discovering fraud.
Update on the law in relation to unfair prejudice petitions.
Provide next steps ahead of the deadline for COVID-related business interruption claims.
Explore the benefits of mediation to resolve disputes.

Read our insights and regulatory updates

Unlawful directors’ loan accounts: what do accountants and directors need to know?

The Companies Act 2006 requires shareholder approval for loans exceeding £10,000, including a director’s loan account (DLA). Upon entering an insolvency process, directors face claims from insolvency practitioners to repay their overdrawn DLA in circumstances where they are often unaware the DLA is illegal. Our article identifies some of the pitfalls of operating a director's loan account and risks faced by directors when a company is insolvent and placed into administration or liquidation.

From red flags to recovery: legal support for accountants when discovering fraud

When carrying out their day-to-day responsibilities, accountants must remain alert to the potential for wrongdoing against their clients - whether by employees, suppliers, or third parties. If you discover potentially fraudulent activity, your client’s approach at the outset can significantly impact the chances of a successful recovery. Where this risk exists, the steps outlined in our article should be considered.

Navigating unfair prejudice claims in shareholder disputes in 2025

Whilst unfair prejudice and shareholder disputes have, at their core, remained the same over the last decade, the courts have subtly altered the landscape through caselaw, developing their opinions on specific issues. This article provides an update on how the law in relation to unfair prejudice petitions has changed.

Business interruption insurance post-COVID: what do policyholders need to know?

The Bath Racecourse judgment provides important guidance on the interpretation of composite insurance policies and the treatment of government support schemes in the context of business interruption claims. In this article, we provide a background to the case, explore the key issues on appeal and provide a brief analysis of the Court of Appeal's decision. We also set out next steps for policyholders in light of the impending limitation deadline for COVID-related business interruption claims.

Using mediation to resolve disputes

Whether advising owner-managed businesses, family firms, or larger corporates, accountants are often the first to be consulted when a commercial dispute arises. Early engagement with legal advisors can help clients explore mediation before costs escalate and in many cases, before proceedings are even issued. Our article explores the benefits of mediation and how it can turn late-day frustration into early-evening resolution.