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Claiming Director's salary

I have recently got a new client, a limited company with sole director and shareholder.

The previous accountant did not enter a director's salary into the accounts. The director was paid in dividends only resulting in a much higher than necessary corporation tax bill.

The previous accountant then filed a P35 showing no salary for the 2011/2012 tax year. The company has an accounting period different to the tax year.

Would I be justified in putting a director's salary into the accounts for the current set of accounts even though part of the year has been covered by the 2011/2012 tax year for which no salary has been declared on the P35?

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Obviously the company's accounting year 2011/12 has now ended.  If you are putting a salary / bonus in for that accounting year you need evidence that a decision was made during that accounting year to pay that salary / bonus.

If no such decision was made at the time then you cannot justify an accounting entry for it in the accounts for that year.

David

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