Hi,
Is it possible to account for sole director takings as salary retrospectively? No Real Time Information returns have been made.
My concern is that, since salary is deducted for tax, the HMRC will argue that you cannot put something as salary retrospectively - i.e. you can't get the tax deduction. But under the old rules, before RTI, you could do this. I have heard that some accountants are still applying successfully the old rules...
Thank you so much for your help!
Replies (23)
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Yes of course. Do either the director or yourself own a car, and if so, is it a DeLorean, and if so, does it have a flux capacitor?
I vote No.
Under the old rules, before RTI, you couldn't do this but HMRC were less likely to notice.
Can't you just write off the director's loan account and then treat it as salary/bonus at that point (or as a dividend if he's a participator)?
Can't you just write off the director's loan account and then treat it as salary/bonus at that point (or as a dividend if he's a participator)?
At today's date, in this year's accounts, maybe.
Depending on other factors.
Why not? What RTI complications? (Not being an RTI specialist, I would have thought a director's loan on which market rate interest is payable is not within any real time reporting.) That Euan bloke used to be good at answering this stuff, but he's retired from this (once great) forum.
I suspect their may have been a misunderstanding of the proposal. I believe that you are correctly suggesting that the point of write off is, for example, now and that the resultant income is reported via RTI in the normal way in the current pay period, which would not cause any problems other than potentially HMRC extrapolating that pay to a full tax year for tax code purposes, which could result in them incorrectly restricting PA.
Easily fixed with a quick call to the ADL.
Noted (that this seems to work and so can be treated as a dividend if it's a participator) and thanks.
Noted (that this seems to work and so can be treated as a dividend if it's a participator) and thanks.
Does it ?
That depends what year the OP wants the payment to fall into.
The dividend treatment (if relevant for such a loan write-off) is mandatory under statute & is not optional, so you just apply the relevant legislation there (that disapplies ITEPA 2003) to determine the relevant dividend tax point date etc.
The problem is that RTI is a payment-based system - it follows that any payments made in advance of a salary credit to the loan account should, strictly, be subjected to RTI at the time of payment. It was a well-documented issue at the time when RTI was being introduced.
I say "strictly" because most choose to ignore the rules.
In all reality, you can't rewrite history.
Forward planning, would be the ideal. Regretfully, not all client's want to take part!
This case seems to support the view that you can have plenty of retrospective flexibility on what's the nature of any cash extractions in the period re dividends at least.
http://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j10861/TC0...
You're welcome. As an aside, what's happened to Ruddles?
Time for a small dog joke. What do call a zoo full only of rubbish little dogs?
...........A Shitzoo!