Management / Service charges between companies and getting them right
I'm hoping you will be able to help on this... And I realise that I may be opening a can of worms.
I do want to avoid the morals on paying tax etc, because I believe that is a separate issue, and is down to each taxpayer involved to make their decision.
I consider my job is to give them options, all legal and within the rules, and then carry out their instruction. For whatever circumstance, the cheapest option may not be the best option, and I would advise in hat way.
My client has one company that owns two other companies 100% and 25% of another.
He is sole director of all 4 companies.
He would like to make a charge to each of the three companies owned by the 'holding' company, instead of taking any salary from each company.
He would then want to take a salary and dividends from the holding company when applicable.
My question is basically, is this possible. Does the holding company need to be a corporate director for this to be possible, or is it ok for the person to be director, but for a charge to be made to each company?
All companies are well within the small profits rate, and so there is no possibility of suggesting that this, or the amounts involved are to bring down the marginal rate of tax.
He says, and I see his point, that it would then show more realistic levels of profits in each company, and would be based fairly on turnover, or the business size in some way.
It does obviously reduce PAYE taxes, both tax and Ees and Eers NI, but he argues that he could theoretically do this by taking a minimal salary from one company, and only taking dividends from the others.
Any guidance or thoughts on this would be very gratefully received.
- Director's tax return 215 4
- Payroo Employer allowance query 125 1
- MONEYSOFT - EARLIER YEAR UPDATE 249 7
- Would this save hours of your time? 392 9
- Wrong career 440 18
- Laptop purchase 1,369 20
- PTP software disaster 241 2
- Producing graphical KPI's etc 166 4
- CIS repayment shambles finally over? 214 2
- Treatment of EU Purchases on Sage 94 2
- Tricky VAT question 163 1
- RTI Annual Scheme Query 106 2
- VT accounts licence key 250 5
- Weely paid employees 216 2
- Splitting the tax year 91 1
- FPS Submission 147 2
- Value pricing 645 20
- non resident receiving UK dividends 209 3
- P11d & Medical Ins 140 1
- vat return 226 1
- Residential Property Purchase Above £750K 792
- Using Sage with Sofa Categories 546
- Does anyone have an unwanted ICAEW wooden plaque? 412
- Goods shipped inter EU and VAT Reporting 292
- Free Tax Legislation? 259
- Director Loan account operation 238
- Non-Resident Director - UK Tax Position? 236
- transferring simply accounting 2010 from xp to windows 7 236
- Sage 200 and Access Dimensions reviews 229
- Paye procedures for CVA 159