Director's Remuneration - Options

Jeremy535897

7chb said:

Jeremy535897 said:

Dazed_and_C0nfused said:

am I right in saying I will be at risk of a penalty of late submission for the 'correct' FPS for that period given it was 10 months ago?  

I think you would have bigger issues to worry about with HMRC than a late submission penalty.

I well recall a client's experience of doing this sort of thing in the mid eighties (taking a corporation tax deduction for accrued remuneration but not actually paying PAYE on it until it was drawn from the loan account). Inland Revenue Enquiry Branch (as it was then) were involved (my firm was approached in a panic by the taxpayer to sort it out, as he had very realistic visions of going to jail). Most people never to get to meet the Inland Revenue heavy mob. It is not an experience to be recommended.

Thank you, that's why I thought I would ask on here rather than doing something which would have been deemed as risky/fraudulent! I was hoping there may have been a genuine work-around for the issue but I'd rather learn a lesson and pay tax due than take that risk.

Very wise. When we saw the "advice" from the previous adviser, we advised the client to send the amount due (£250,000) immediately to HMRC, which rather took the wind out of HMRC's sails and we sorted it all out amicably from there.

unholyangel

7chb said:

unholyangel said:

7chb said:

Dazed_and_C0nfused said:

am I right in saying I will be at risk of a penalty of late submission for the 'correct' FPS for that period given it was 10 months ago?  

I think you would have bigger issues to worry about with HMRC than a late submission penalty.

HMRC seem to have publications on a EYU (Earlier Year Update) submission which appears to be for this reason though?

EYU is to correct a mistake - where the information you originally submitted was not what actually happened. 

It can't be used to amend the correct information to fraudulent information. 

Ok thank you for clarifying, I hadn't come across it before and so thought it may be a possible option.

Presuming there are no other options, I'm guessing the best bet is to take the hit on the Corporation Tax for that period and to instead include dividends from my post tax profit on my self assessment to cover my remaining personal allowance?

Tax planning is a forward thinking game, you can't plan retrospectively. 

IMO, get an accountant. Even if just for initial tax planning advice rather than filing. Tax can be a tricky business and very detail oriented. 

7chb

[Deleted User] said:

7chb said:

unholyangel said:

7chb said:

Dazed_and_C0nfused said:

am I right in saying I will be at risk of a penalty of late submission for the 'correct' FPS for that period given it was 10 months ago?  

I think you would have bigger issues to worry about with HMRC than a late submission penalty.

HMRC seem to have publications on a EYU (Earlier Year Update) submission which appears to be for this reason though?

EYU is to correct a mistake - where the information you originally submitted was not what actually happened. 

It can't be used to amend the correct information to fraudulent information. 

Ok thank you for clarifying, I hadn't come across it before and so thought it may be a possible option.

Presuming there are no other options, I'm guessing the best bet is to take the hit on the Corporation Tax for that period and to instead include dividends from my post tax profit on my self assessment to cover my remaining personal allowance?

For 2020/21 - fine! For 2019/20 - not possible! When is the dividend date?

[Deleted User] said:

7chb said:

unholyangel said:

7chb said:

Dazed_and_C0nfused said:

am I right in saying I will be at risk of a penalty of late submission for the 'correct' FPS for that period given it was 10 months ago?  

I think you would have bigger issues to worry about with HMRC than a late submission penalty.

HMRC seem to have publications on a EYU (Earlier Year Update) submission which appears to be for this reason though?

EYU is to correct a mistake - where the information you originally submitted was not what actually happened. 

It can't be used to amend the correct information to fraudulent information. 

Ok thank you for clarifying, I hadn't come across it before and so thought it may be a possible option.

Presuming there are no other options, I'm guessing the best bet is to take the hit on the Corporation Tax for that period and to instead include dividends from my post tax profit on my self assessment to cover my remaining personal allowance?

For 2020/21 - fine! For 2019/20 - not possible! When is the dividend date?

This again comes down to what is allowable.  I am the only shareholder, my partner and I are the only directors.  Therefore 'say' I've already got minutes and interim dividend vouchers prepared dated March 20, and an adjustment has been made to my Directors Loan account dated March 20, is it safe to include this as a dividend payment on my 19/20 tax return? I'm guessing the payment doesn't need including through our payroll software or other submission if going on my SA submission?

[Deleted User]

7chb said:

[Deleted User] said:

7chb said:

unholyangel said:

7chb said:

Dazed_and_C0nfused said:

am I right in saying I will be at risk of a penalty of late submission for the 'correct' FPS for that period given it was 10 months ago?  

I think you would have bigger issues to worry about with HMRC than a late submission penalty.

HMRC seem to have publications on a EYU (Earlier Year Update) submission which appears to be for this reason though?

EYU is to correct a mistake - where the information you originally submitted was not what actually happened. 

It can't be used to amend the correct information to fraudulent information. 

Ok thank you for clarifying, I hadn't come across it before and so thought it may be a possible option.

Presuming there are no other options, I'm guessing the best bet is to take the hit on the Corporation Tax for that period and to instead include dividends from my post tax profit on my self assessment to cover my remaining personal allowance?

For 2020/21 - fine! For 2019/20 - not possible! When is the dividend date?

[Deleted User] said:

7chb said:

unholyangel said:

7chb said:

Dazed_and_C0nfused said:

am I right in saying I will be at risk of a penalty of late submission for the 'correct' FPS for that period given it was 10 months ago?  

I think you would have bigger issues to worry about with HMRC than a late submission penalty.

HMRC seem to have publications on a EYU (Earlier Year Update) submission which appears to be for this reason though?

EYU is to correct a mistake - where the information you originally submitted was not what actually happened. 

It can't be used to amend the correct information to fraudulent information. 

Ok thank you for clarifying, I hadn't come across it before and so thought it may be a possible option.

Presuming there are no other options, I'm guessing the best bet is to take the hit on the Corporation Tax for that period and to instead include dividends from my post tax profit on my self assessment to cover my remaining personal allowance?

For 2020/21 - fine! For 2019/20 - not possible! When is the dividend date?

This again comes down to what is allowable.  I am the only shareholder, my partner and I are the only directors.  Therefore 'say' I've already got minutes and interim dividend vouchers prepared dated March 20, and an adjustment has been made to my Directors Loan account dated March 20, is it safe to include this as a dividend payment on my 19/20 tax return? I'm guessing the payment doesn't need including through our payroll software or other submission if going on my SA submission?

My goodness! With all the respect I can muster, should you be submitting the return without advice?  There was no dividend paid in 2019/20 - others have mentioned the pitfalls - how can one go on the 2019/20 return? Also, dividends have nothing to do with PAYE or payroll. Please be careful - there are penalties for incorrect personal and corporation tax returns.

Jeremy535897

7chb said:

purdyoaten2 said:

7chb said:

unholyangel said:

7chb said:

Dazed_and_C0nfused said:

am I right in saying I will be at risk of a penalty of late submission for the 'correct' FPS for that period given it was 10 months ago?  

I think you would have bigger issues to worry about with HMRC than a late submission penalty.

HMRC seem to have publications on a EYU (Earlier Year Update) submission which appears to be for this reason though?

EYU is to correct a mistake - where the information you originally submitted was not what actually happened. 

It can't be used to amend the correct information to fraudulent information. 

Ok thank you for clarifying, I hadn't come across it before and so thought it may be a possible option.

Presuming there are no other options, I'm guessing the best bet is to take the hit on the Corporation Tax for that period and to instead include dividends from my post tax profit on my self assessment to cover my remaining personal allowance?

For 2020/21 - fine! For 2019/20 - not possible! When is the dividend date?

[Deleted User] said:

7chb said:

unholyangel said:

7chb said:

Dazed_and_C0nfused said:

am I right in saying I will be at risk of a penalty of late submission for the 'correct' FPS for that period given it was 10 months ago?  

I think you would have bigger issues to worry about with HMRC than a late submission penalty.

HMRC seem to have publications on a EYU (Earlier Year Update) submission which appears to be for this reason though?

EYU is to correct a mistake - where the information you originally submitted was not what actually happened. 

It can't be used to amend the correct information to fraudulent information. 

Ok thank you for clarifying, I hadn't come across it before and so thought it may be a possible option.

Presuming there are no other options, I'm guessing the best bet is to take the hit on the Corporation Tax for that period and to instead include dividends from my post tax profit on my self assessment to cover my remaining personal allowance?

For 2020/21 - fine! For 2019/20 - not possible! When is the dividend date?

This again comes down to what is allowable.  I am the only shareholder, my partner and I are the only directors.  Therefore 'say' I've already got minutes and interim dividend vouchers prepared dated March 20, and an adjustment has been made to my Directors Loan account dated March 20, is it safe to include this as a dividend payment on my 19/20 tax return? I'm guessing the payment doesn't need including through our payroll software or other submission if going on my SA submission?

Unless everything is written down the old fashioned way, with no computer involved there will be plenty of evidence that these entries were made long after 5 April 2020, and do not belong in 2019/20. Learn from the mistake, and take your salary/dividends in the right proportions at the right times. Get some advice. Corporation tax returns are not for the uninitiated.

Grumpy_chap

I am certain it is not the OP's intent, other than to check what is or is not permitted, but some of the suggestions in the OP sound like they could be fraud:

7chb said:

I am looking at paying myself an additional salary prior to 05/04/20.  

7chb said:

could I in theory get away with classing myself as a consultant, invoicing my company for this work with an invoice dated March 20, and then including this as separate self-employed income on my self-assessment return? 

The OP has received some very good advice from other posters, and seemed to understand:

7chb said:

Thank you, that's why I thought I would ask on here rather than doing something which would have been deemed as risky/fraudulent! I was hoping there may have been a genuine work-around for the issue but I'd rather learn a lesson and pay tax due than take that risk.

But then reverted back to something that sounds like it could be fraudulent:

7chb said:

'say' I've already got minutes and interim dividend vouchers prepared dated March 20, and an adjustment has been made to my Directors Loan account dated March 20, is it safe to include this as a dividend payment on my 19/20 tax return?

I can only and strongly suggest that the OP engages the services of professional advice, i.e. an Accountant.
Otherwise, this is just a game of Monopoly.
"Go to jail.  Go straight to jail.  Do not pass GO.  Do not collect £200."

oldbikebloke

7chb said:

This again comes down to what is allowable.  I am the only shareholder, my partner and I are the only directors.  Therefore 'say' I've already got minutes and interim dividend vouchers prepared dated March 20, and an adjustment has been made to my Directors Loan account dated March 20, is it safe to include this as a dividend payment on my 19/20 tax return? I'm guessing the payment doesn't need including through our payroll software or other submission if going on my SA submission?

OK, lets indulge with your games. What you seem to be implying is a DLA repayment was made in March 20 which you now
wish to "reclassify" as something else?

since DLA repayment has zero personal tax implications, changing it to something won't save you personal tax as none was due in the first place to "save"

the pitfalls of changing it to PAYE to "save" corporation tax have already been flagged

you imply you would be below the personal tax threshold anyway so "using up" your allowance by talking additional taxable income in the form of dividends does not "save" you anything since again no tax has been paid to save (dividends obviously having no impact on Corp tax)
I am assuming you already have the cash in your persona bank from the existing "DLA adjustment". So no tax and no extra cash from this purely paper exercise that achieves nothing. If the "DLA adjustment" is literally an paper adjustment only and is not backed by physical bank movements, then once again the timeline undermines your "intent" since a dividend voucher dated Mar 20 that was not paid until just before your tax return in Jan 21 is what it is - a ploy to "massage" your tax  

As a start up company with a DLA owed to you, the logical step is to repay the loan asap as that has no personal tax implications and greatly improves the company's balance sheet debt position should it need to borrow money in the future.