How do you treat multiple director income?

Director has salary from company(no PAYE scheme set up) and salary from unconnected employer.

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My friend contracted through a limited company (YE 30TH September) but never set up a PAYE scheme. I’ve told him about the LEL.  He stopped contracting in December 2016 and started a new PAYE job in February 2017. He needs to fill in a tax return because he has to put through a big dividend from his limited company due to using the company bank account like a personal bank account. (I’ve given up trying to tell him otherwise). 

With regard to the 5th April 17 tax return is he able to show any salary from his directorship (e.g £5,820) considering no PAYE scheme is in place. If it helps the combined salary from the two employments will be under the personal allowance, infact it will be under the PT(Primary Threshold) 

I have trawled the Internet for examples but couldn’t find a similar scenario so I thought I would ask accountingweb.

Any replies would be very much appreciated

Replies (7)

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By Tim Vane
28th Jun 2017 14:13

Of course he must declare the salary. To not do so would potentially be tax evasion.

EDIT - if the amount borrowed from the company before the dividend was large then he may also have a benefit in kind to declare.

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By andy.partridge
28th Jun 2017 14:43

Of course he must declare the salary . . . if he took one. Frequent dipping into the company bank account does not necessarily constitute a salary. Which payments were 'salary' and which payments were 'loans' and how have you determined the different treatment?

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By Duggimon
28th Jun 2017 15:01

If he receives a salary from more than one employment then both salaries should be reported through PAYE regardless of the tax position.

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Replying to Duggimon:
By Tim Vane
28th Jun 2017 15:15

Only the second employment, and only if concurrent, which we are told they were not.

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Replying to Tim Vane:
By Duggimon
28th Jun 2017 16:18

Well, to be pedantic, we're told that he stopped contracting services through the company in December, the salary paid to him as an office holder could be for any period since he hasn't ceased being a director.

Ultimately of course, the facts of the matter are more likely that the salary was neither paid prior to December 2016 nor within the tax year to 5 April 2017 but is instead a time machine salary.

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By SteveHa
28th Jun 2017 15:35

Let's establish the facts. Did he pay, or record an intention to pay that salary from his company, or is this another post asking if it's OK to re-write history?

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By curiousmind
28th Jun 2017 16:18

Thank you all for your responses.

A salary of £2,800 was paid officially. 10 payments of £280 with the reference salary on the bank. The rest of the money was withdrawn from ATM or used to pay for personal expenses.

He was paid £2000 in February and £2000 in March (Awaiting P60 details to see tax deducted) so total for tax year to declare is £6,800

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