Spouses On The Payroll

[TheCyclingProgrammer]

Yes, that's the reasoning.

Technically, if you have the dividend voucher and you file RTI, so you have clear paperwork, you can probably get away with this. But if you are ever investigated, when they see what you are doing you are going to have a lot of explaining to do.

What evidence do you have to back up this spurious claim?

It would be a very lax HMRC inspector who simply looked at a single transfer of money and seeked to tax it as one thing without asking for any further paperwork to show what it was and if it even got as far as a tribunal and all the relevant paperwork was presented I would imagine the judge would be most unimpressed that HMRC had not done their due diligence.

In reality, an inspection would probably go something like this:

HMRC: I see a transfer for £xxx from company bank account to your personal account here. What was that for?
Director: That was to cover a salary payment and dividend that was declared around the same time. I made a single payment as it was more convenient.
HMRC: Do you have the paperwork to back this up?
Director: Of course, here's the payslip and the RTI submission receipt showing the details of the salary and here's the dividend voucher and minutes of the board meeting where the dividend was declared.
HMRC: Thank you, that will be all.

I wonder if some of the posters on here like to get their kicks by scaring newbies with paranoid nonsense like this.

[Alan @ BroomeAffinity]

I agree it's good practice to have separate payments but providing the paperwork is in place there is unlikely to be a problem with a single payment. I was privy to an enquiry once where one payment was made each month to cover contractor's salary, his divi, his expenses and his wife's divi. Inspector queried it, was provided with paperwork (payslip, divi vouchers, expenses claim), and was satisfied. Extreme case and I wouldn't recommend it but sometimes we've a tendency to be over cautious. That said, I wouldn't recommend it and it's not exactly difficult to set up three payments instead of one.

[No2politics]

I personally keep the payments of salary, expenses and dividends all separate. I find it actually easier to do this! Good practice as well and agree with WordisBond

[SueEllen]

Salary can easy be done as monthly standing order(s).

Expenses are done as needed normally monthly as obviously they vary.

Dividends done less frequently.

[Pondlife]

Salary can easy be done as monthly standing order(s).

Expenses are done as needed normally monthly as obviously they vary.

Dividends done less frequently.

Exactly.

Keep it simple.

[WordIsBond]

I wonder if some of the posters on here like to get their kicks by scaring newbies with paranoid nonsense like this.

LOL. Yeah, I spend all my time dreaming up ways to scare newbies, doesn't everyone?

Did I say if you have clear paperwork it is technically ok? Yeah. Will it make HMRC suspicious? Yeah. I have a built-in radar for a few contributors on here that when I see their name makes me take extra notice of what they say, and you are one of them, but I don't think this was your finest intervention.

And your "owed a supplier money" analogy is very shaky.

First, I wouldn't pay a lump sum unless I got a statement showing it, so that I could give a reference to the statement in the payment. Otherwise, I'd want each invoice to be referred in the payment, to make sure it gets credited properly to my account. I DON'T want to unnecessarily trust the competence of their bookkeeping and then have hassles getting it sorted.

But second, a dividend is not "owed" to a supplier. Salary/stipend are paid, owed, to suppliers of labour. But dividends are paid to owners of the company. And the only reason we get favourable tax treatment is because those are very different things. It is a coincidence of many of our companies that the suppliers of labour are also the shareholders, but our legal and tax status keeps them sharply distinct. And it is far cleaner and also better for our mindset to keep those distinctions in our practices.

Finally, a better analogy. A week or two ago someone was asking about paying business expenses on his personal credit card and having his business pay the card, then reimbursing the business with personal funds for any personal items. The answer there was very similar to this -- yes, you can do that if your record-keeping is perfect, but it's messy, it isn't normal business practice for businesses to pay personal credit cards, and it would be far cleaner, more business-like, and less suspicious-looking to have your company reimburse you for business expenses, and pay the credit card from your personal account.

I'd say this question is very comparable to that one. Yeah, you can do it if you are very careful about paperwork, but it is messy and not good business practice.