Dentist extracts better tax treatment using trust
Amounts paid from a dentist’s company to a remuneration trust, which were lent back to the dentist, were distributions rather than earnings, and weren’t caught by the disguised remuneration rules.
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So disguised remuneration rules don't need to apply to OMB companies?
If this is an example of 'levelling up' then maybe I should recant my flippant put-down (on a now censored thread) regarding the suggestion of negative salaries.
Presumably I can have my company put me on a salary of -£30k ... perform the PAYE calcs ... claim the negative tax back from HMRC = free money innit?
Or is it one rule for the well-connected and another for the rest of us?
Of course the logical consequence of a business paying a negative salary is that the business will likely need to be taxed on said negative salary as effectively income of the business.
Obviously true, except (at the risk of confusing two distinct threads) it didn't seem to be so clear to OP on t'other thread. Which is why I used the sarcastic analogy of saving money by not buying food for the dog that I don't own ... which has got me reprimanded!
For the -ve salary concept to work, you have to be able simultaneously to believe that the numbers are sometimes real (when it's to your advantage) and at other times not (when it's disadvantageous) ... which struck me as not dissimilar to the approach taken by the 'taxpayer' in the above article.
Personally I try to avoid believing in impossible things (unlike the Queen in Alice in Wonderland) ... although, judging by the last set of Party Political Conferences, it may be a concept whose time has come!
See also my comments here: https://www.accountingweb.co.uk/any-answers/another-interesting-ebt-rt-case
Even if HMRC don't win the inevitable appeal(s), one also needs to consider the IHT issues, as presumably if >£331k was transferred into trust there would be a 20% chargeable transfer (assuming it would not be a s86 IHTA 1984 trust on the facts).
This beggars belief.
Company claiming a tax deduction for what the taxpayer now says were dividends
Is there any point in telling clients that they should comply with tax law?
With the company accepting that the payments to the trust are NOT deductible from CT profits much of the tax gain has been lost. The company could, and would, have paid much of the income of the dentist to him as dividends.
The costs of the trust, might consume much of the dividend tax saved.
These sorts of contrived schemes bring the profession into disrepute.