I've seen Limited company accounts prepared by other firms of accountants where the company pays the Director or Directors consultancy fees. There is a note in the accounts stating that these transactions are at an arms length basis etc.
This seems to me to go against most tax law.
I wondered if others had come across it. Whether it is/was prevalent in any specific industry sectors.
Also whether anyone has had an HMRC enquiry in such a situation and how it went.
Replies (3)
Please login or register to join the discussion.
Case by case
You have to look at each on a case-by-case basis. It is easier where the director is self-employed already and undertaking that for which they are claiming consultant ( and therefore self-employed ) status. Refresh your knowledge and be prepared to argue your case.
Agreed
Two other factors that will indicate employment as a director, rather than self-employment as a consultant, are where the director is undertaking the work for which purpose the company was formed and where the director is the only person working for the company.