Directors Bonus

Directors Bonus

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Director has an overdrawn DLA. A bonus is planned within 9 months of the company year end to clear the DLA. The bonus will result in a significant PAYE/NI liability effectively leaving the company insolvent and needing to appoint an IP with HMRC as the only creditor. The director does have an employment contract which states he has the right to receive a bonus.

Is this plan fraught with danger in terms of haunting the director.

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By mrme89
09th Jul 2014 11:31

What does the contract say about the bonus? I.e profit related, guaranteed etc?

 

Why would the director take a large bonus knowing that it will leave the company insolvent?

I would have thought this would be a breach of his duties as a director.

 

You getting close to operating like a bank. The only difference being the tax payer won't bail you out.

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By Carolynne
09th Jul 2014 10:34

If you Don't Give the Bonus

Remember that by paying the 25% to HMRC on the overdrawn account, is given back to the company when perhaps times are better, and a bonus can be given to clear it further down the line.

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