Firstly, I'll try to explain the situation. I'm producing a short film. I have a production company and we want to use my production company's insurance to cover the film. However, the money for the film is coming from two friends of mine who are directing and producing the film. Neither of them are currently involved in my company. Ideally, we want my company's insurance to cover not just the film but also to cover my two friends (the insurance policy includes public liability, employer's liability, equipment cover and loss-of-hire). My company is just a small little "production company" with 4 directors; 3 of whom are inactive in the company. We have about £5,000 of assets.

As I understand it, one way to make this work is for my company to employ my two friends and then they loan £4k to my company. We'd then make the film using our personal bank accounts (we can't easily get money directly out of the company's bank account because the company doesn't have a debit card). All invoices and contracts would be made out to the company.
At the end of the film we'd issue my company with expense sheets to claim back the £4k. The aim of this exercise is to create a robust and legitimate paper trail that puts my company at the "top of the pile" so that we can insure the film with my company's insurance policy. The workflow would be:

1.Mid November: my company employs my two friends. They loan my company £4k
2.Early December: We shoot the film and pay for items using our personal bank accounts.
3.Mid December: We issue my company with expense sheets to claim back the £4k. We terminate my friends' employment with my company. We then mark the £4k loan as "forgiven".

This scheme requires that my friends effectively spend £8k while we're shooting and then claim back £4k from my company after the film shoot. Needless to say, this isn't a profit-making exercise. We don't expect to get any money back from the film.

The problem is that my friends don't have £8k of headroom in their personal finances! Would you know of any way to get round this problem? For example, would it be possible to bring the £4k out of my company's bank account before we start shooting (i.e. a kind of "pre-emptive" refunding of our expenses)? Alternatively, could we put less than £4k into my company's bank account whilst still leaving a robust paper trail that puts my company at the "top of the pile"?

More worryingly, I've been advised that if things go really wrong then there's a chance that we won't be protected by the insurance OR by the limited liability afforded by the Ltd company because the project is, in essence, a personal project and it's not entirely legitimate to use the company for a personal project. I understand that there's a guiding principal in accountancy called "substance over form" or "don't try to be clever - your true intentions will always be found out".

Any clues at all would be fantastic! Unfortunately, we're under a bit of time pressure here but aren't we always!

Is the only bullet-proof way to protect ourselves to take out an insurance policy specifically for the film? If so, do we have to setup a Ltd company or a partnership or can we, as individuals, take out an insurance policy that will adequately cover ourselves, our crew, and our equipment?

Many thanks,
Jack