Payment of Self Assessment Liabilities

Payment of Self Assessment Liabilities

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I thought the answer to this was obvious, but maybe I have missed something . . .
A new client has expressed surprise that he is being chased for income tax by HMRC as he was under the impression that his previous accountant had devised a scheme whereby all his personal tax liabilities would be met by the the company of which he is director with no further liability accruing to him. To my mind if a company pays anything on behalf of a director / employee, that amounts to remuneration (be it salary or dividends)irrespective of what the parties choose to call it, then its taxable. Have I missed some trick here?
Alison Cook

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By mikeymadman
28th Sep 2006 22:53

did he mean...
Did he mean to say that the company paid him personal allowance + dividends? I've heard that clumsily described by people in a similar way, when they have refused to believe there can be an additional liability.

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By frauke
28th Sep 2006 19:40

missed a trick?
No I don't think you have.

He should ask his previous accountant details of this scheme, as I think this is just using the system as long as no one notices. Of course if the scheme really existed it would have been reported first to HMRC.

I have seen companies pay directors liabilities and then adjust their own accounts so they also pay CT on the amount, and then find themselves pay NIC class 1a. And then HMRC may decided to look into the p11d implication etc etc...... at a later date. Used to happen all the time, but it no longer worth the extra hassle of doing it if the HMRC realise what is going on - and of course adjusting profit and paying NIC 1a will be a big give away!

And I almost forgot - ticking the yes box on the P35 stating that tax free payments had been made so that the company bear any of the tax rather than deduct it from the employee!

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