I am just in the process of changing from a sole trader to a Ltd Company, and I getting lots of conflicting advice. The main reason I am changing is that I was told that I can have myself and my wife as shareholders, pay ourselves a minimum salary (about £7000/year each) that will keep us below the NI and income tax brackets and then take the rest as dividends. Two accountants have told me this is fine and common practice but two different accountants have said it this is like a red flag to HMRC and they will never believe that this is a legitimate salary. Does anyone do this currently and have HMRC ever questioned it? Any thoughts or advice would be very much appreciated- many thanks!