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.
- Market Value/Connected Persons 197 8
- Google contacts sharing within our domain 78 1
- Limited Companies, Directors Employer Registration P11D 144 4
- SAGE - Filtering Inactive Suppliers/Customers 124 2
- Personal allowance 420 10
- Workshops centred around Xero 459 12
- Scams are not always obvious 694 19
- RTI, no payroll but BIK 128 1
- P60 from HMRC Basic Paye Tools 134 2
- VAT on long lease in comercial property thathas opted to Tax 96 3
- Related party disclosures 174 3
- Input vat on my fees after deregistration 183 2
- Charity Buildings and Zero-rated Vat 87 1
- Auto Enrolment, Payroll, Small Client Advice and what to charge? 617 17
- 100% FYA, do I have to cliam all of it in 1 year? 245 4
- Vat query - EU customer requesting invoice without charging vat 255 8
- Is this legal? 626 9
- Saying NO to a time wasters 1,998 23
- Cells from many sheets 127 2
- Taxation of rental income 221 4
- New Fangled Penalties 1,043
- Moving away from CCH software 905
- Recruitment agencies 529
- QROP pension input amounts 411
- write off loan or loan to equity swap or both 363
- Deemed Employment Payment 346
- HMRC BENCHMARK EXPENSES 308
- Unused Losses and Post Cessation Receipts 300
- EIS relief on transferring shares to spouse 221
- fraud 218