Member Since: 21st Nov 2001
Tax Consultant Raven Taxation Ltd
27th Jul 2020
But surely we're not talking about an accrual here but a credit to the DLA. I'm not an accountant but if interest had been accrued in the accounts, crediting it to the DLA would give a corresponding reduction in the accrued amount, wouldn't it - i.e. a recognition that it isn't an accrual any more, it has been 'paid'? And if you didn't treat a credit to the DLA as 'paid' when would you recognise payment? How would you determine when a transfer of funds reducing the DLA credit represented a payment of interest rather than a payment of a dividend or salary or expenses reimbursed? I really can't see how a credit to the DLA isn't a 'payment' of interest. Clearly it can be avoided by not crediting it to the DLA (which I think is what you are saying) but that wasn't the question (and, unless interest when it is paid is paid by bank transfer on that day rather than crediting it to the DLA, you still have the issue of identifying when a drawing on the DLA constitutes payment).
8th Jul 2020
Yes - do!
6th Jul 2020
Hi Tax Dragon - I'm still here!
I agree with you. There is no need to disclose a cash transfer on the CGT pages. Even if it generated an exit charge, that would be returned using IHT forms and wouldn't need to be referenced on the CGT pages of the trust return.
21st Apr 2020
I told a client at the start that HMRC would write to her by mid May explaining how to claim and she should ignore any texts, emails or phone calls purporting to be from HMRC about this as they would be scams. A couple of days ago she emailed me say that some of her small business friends had already had texts from HMRC about their claim and she was worried she had missed out. Sometimes I wonder why I bother!
17th Apr 2020
I thiought it was some sort of scam when I got the email!
16th Apr 2020
But the issue here is not really the low salary/high dividend = reduced furlough pay. It is that incorporated small businesses cannot access any furlough pay without essentially ceasing to trade. An unincorporated small business can carry on trading and will get a payment to make up for reduced income. I operate through a limited company mainly for limited liability purposes as do many genuine incorporated small businesses (I believe a government study showed this as the main reason for incorporation a few years ago). Although I had 3 weeks with virtually no work, I can't claim anything unless I make myself unavailable to my clients, which I cannot do because a) I want to be here when they need me and b) I’d like to still have a business when this is all over!
I'm not that bothered for myself, I have some money in the bank (saved for my pension) and my work is picking up a bit because I and my clients can work from home, but I can't see why a small incorporated business should be so disadvantaged compared to an identical small unincorporated business. There must be many small incorporated businesses who have a significantly reduced turnover because of the government imposed lockdown and yet cannot claim anything without effectively closing their business – regardless of whether they take all their money out as salary, all as dividends or a mixture. We should also not forget that governments have used corporation tax rates/incorporation reliefs/reliefs only available to companies or investors in shares to encourage people to incorporate as it brings them into the PAYE/CT system, makes it much more difficult to under declare income or over declare expenses and provides a captive audience if there is a need to increase CT rates, raise taxes on dividends etc. It isn't an accident that virtually no attempt has been made to reduce the tax savings obtained using the perfectly acceptable low salary/high dividend arrangement. Also, whilst you may warn your clients about the downside of low salary/high dividends in term of earnings-related benefits, many small incorporated businesses will just have been told that’s the best way to extract the profits by their accountant without any such warning and gone ahead. This loss of income is not caused by their own actions or even by coronavirus, it is caused by the government’s response to the coronavirus (and I’m not saying the response is wrong) which is preventing them from earning money/reducing their income in exactly the same way as for the self-employed.
8th Apr 2020
You beat me to it - I was just about to post exactly that!
3rd Apr 2020
Smug here - but then I had heard the word before so I can't claim I'm super clever and just instinctively knew!
30th Mar 2020
That’s a bit of a sweeping statement, Steve. How many accountants do you know who have advised their self-employed clients not to incorporate because they think they should pay more tax and NIC or to incorporate and take a full salary and no dividends and pay tax and NICs they didn’t need to pay? Have you given clients that advice? Whilst, as my clients know, I won’t get involved in artificial tax avoidance schemes because I find them morally reprehensible, using a company as your business vehicle for limited liability and then taking money out in the most tax efficient manner and saving (for many) a very small amount of tax and NIC doesn’t strike me as a heinous crime. Especially as the government could easily have legislated to remove the tax/NIC saving if they had wanted to. And it certainly doesn’t warrant this difference in treatment between those operating an unincorporated business and those operating an incorporated business. My work has fallen off a cliff in the last two weeks but, unlike unincorporated businesses, I can’t get any government help unless I close for business and leave my clients with no access to tax advice for their clients, something I’m not prepared to do.
23rd Dec 2019
On 23rd Dec 2019 | marcia.bowers Wrote:
"My client did consent to the assets being sold. Four of the beneficiaries sold their shares in July 2016 but two retained the holdings personally. My client just didn't bother to tell me about it until he got a copy of the distribution statement over two years later. Don't know why such a long delay."
Ah well - I wouldn't be too bothered if he had penalties to pay then. Maybe it will be a lesson learned!