Service Companies Question 1 on SA100 return

Service Companies Question 1 on SA100 return

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I run a small practice, about 60 clients, around half of which are one man limited companies.  If I follow the HMRC guidance on when to make an entry in Box 1 under Service Companies, and ignoring any IR35 implications,  then surely I would be making an entry for each and every one of my clients who operate through a one man limited company as more than half of the company's income is derived from services supplied by the shareholder/s personally.  Indeed under this guidance all of us sole practitioners operating through a limited company would also be making an entry in this box on the SA return.  Can this really be what is intended or is it a trick question?  What are other advisers doing?

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Euan's picture
By Euan MacLennan
09th Apr 2010 14:14

Answering the question

As the question has no direct bearing on the tax liability of the individual, it has been argued that the Revenue has no legal right to ask the question on the tax return.

However, unless you are minded to argue the case with the Revenue, the answer to your question is Yes - you should be completing the box with the total of the salary and grossed-up dividend received by your one-man service company clients.  The only exception is the IR35 case where all remuneration is taken out of the company as salary.

And Yes - we fill in the box for our clients .... when we remember!

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By User deleted
09th Apr 2010 14:18

It seems to me...

... the more that people complete it, in accordance with the guidance given, the more HMRC's little (not so) covert fishing expedition is undermined, and they'll have to resort to Revenue Intelligence (is that an oxymoron?).

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Nichola Ross Martin
By Nichola Ross Martin
12th Apr 2010 11:11

Seems like that to me too.

I agree with Anon, if everyone ticks it the information will be pretty useless. It may be useful to know exactly how many OMBs there are in the UK though, and so I can't see a problem with HMRC having that data as when it is published it may influence tax policy in the future.

On the other hand, we know how many companies are in the UK, and we know how many are big, so it does not take an enormous guess to work out how many are small and small ones are generally, as we all know, OMBs anyway. So on a cost v benefit basis, the questions are probably a waste of time. When I was Aweb's tax editor, I spent many days writing about these questions so did Rebecca Benneyworth, Keith Gordon and others, you look at the issue now, and ask "Why on earth did we bother?"

Ho hum, I am just fed up about the Furnished Holiday Letting fiasco, more re-writing and time wasted!

Virtual tax support and know-how for accountants: www.rossmartin.co.uk

 

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