Newly incorporated client (musician) had £20k tax bill. His agent had received £40k into its client account, I instructed that up to £30k could be taken as dividends. Very, very unfortunately, the agent paid the money due for tax direct to the musician rather than to the the limited company. I have explained that the the dividends cannot possibly be paid by a 3rd party, but what, if anything, can be done to rectify the position now? Can we avoid this looking like it was paid to him under sch D?
Mike
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Fame Academy
You have not given us much to go on here for a full response.
I take it that the musician had a tax bill of 20k under Sch D before incorporation.
When you say his agent had received £40k into "its" client account, what do you mean? Is this royalties? Who is the "it." referred to? Do you mean the Musician's newly incorporated Co?
Based on what you have told us, why does the musician not repay the whole lot back to the agent as a short term loan repayment and then go through the exercise you mentioned via the Dividend route, but this time paying the tax on the divis to the revenue.
However that does not solve his 20k previous tax liability, although it may give him the clear funds to settle it.