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Originally Posted by funkyd
Isn't this asking to be picked up by the IR? Wouldn't a more sensible salary be minimum wage? At least it can't be argued that it isn't enough to live on and obviously a way to dodge taxes?
I pay myself a £20k salary and the rest in a dividend spread though the year. Sure you can get more but why take the risk?  |
This is a well rehearsed argument between contractors (& their accountants) and HMRC.
The thing is that HMRC have no powers to argue whether a director's remuneration should be £4,800 or £20,000 - in fact they would argue that neither is high enough and they'd be looking for £50k plus.
There is no law which says what a director must earn - the minimum wage does not apply to directors unless they have a contract of employment.
They have specific "tools" for chasing contractors - they are IR35 and S660 and if you aren't caught by either, there isn't anything HMRC can do about a £4,800 salary - conversely if you are caught by one or the other, even a £20k salary is unlikely to satisfy them. I would imagine the same would apply to the Form 42 legislation - they'll be wanting "all or nothing".
Even if it is "an obvious way to dodge taxes", there is nothing the HMRC can do about it unless it falls under IR35, S660 or the Form 42 thingie!