HMRC frustration

HMRC frustration

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I've had an HMRC query with a corporate client of mine.  Its very simple.  There are two transactions in the year.  One is a bank payment of £15k relating to a dividend (all paperwork in order) and the other is £30k directors loan repayment.  She was owed about £60k in total, so took some out.

The Inspector decided the whole £45k should be a dividend - for obvious purposes on his behalf.  I have provided the proof of the agreed accounts and also a copy correspondence confirming this payment was a DLA repayment and he has now agreed that this is the case.  However, he says this:-

"as the £30k is a repayment of part of the DLA balance owed, then this sum is being effectively being provided to XXX as either a dividend paid or a salary payment on which PAYE & NIC would be due - I would be grateful for your comments".

I am seriously frustrated that I now have to write a "polite" letter pointing out what a DLA is and that, no, its not either a dividend or a salary payment.

What a waste of time.

Replies (5)

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By cbp99
28th Feb 2014 12:44

Ask him for

the statutory basis of his assertion that repayment by a company, of monies loaned to it by a director, are subject to Paye/NI.

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Replying to memyself-eye:
RLI
By lionofludesch
28th Feb 2014 13:07

Like it

cbp99 wrote:

the statutory basis of his assertion that repayment by a company, of monies loaned to it by a director, are subject to Paye/NI.

That should bring an interesting response.

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By SJRUK
28th Feb 2014 12:46

Ah okay, good wording.  I was

Ah okay, good wording.  I was just pondering how to finish my letter off and that will do nicely.  Thanks.

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By bernard michael
28th Feb 2014 14:39

Or the sentence will be ignored

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By billgilcom
28th Feb 2014 15:50

I don't suppose

that the payment was incorrectly described in the company's contemporaneous records giving the officer an undesirable stance. Presumably the remuneration was decided/approved at the AGM and will be recorded as such in the company minutes (if your client has been good enough to get ALL the dividend paperwork and considerations put properly to bed with not one shortcoming - or is that just your view not HMRC's). The only scope for HMRC's stance might in my view be if the company did not distinguish between the £30K repayment of loan and other amounts depicted as remuneration and/or the company and their advisers have painted a different picture to that found in the records.  Mind you the letter to you is weak to say the least as it has no statutory basis for the assertion - and then the "please sir/madam  can I have your comments as I am not really certain myself". If HMRC was sure of its position they can make a direction as to the failure to operate PAYE etc. (by the company) and take it to appeal but before then they will at least have to give you the statute and case law that gives them a case for their stance. Don't let them off with it and if they persist - after this response -  in an untenable manner put a shot across their bows that they are wasting your clients fees and you will be recording your time with a view to making an application for costs as their position is contrary to fact - hopefully - and not based on any statute or case law principles.  

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