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  1. #1

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    Unhappy being charged because I don't want to be 'tax efficient'

    I do all my company accounting online, and get a great service, though there are some manual things I need to ask them to do, because I want to pay myself a higher salary than they recommend. Up to now they've done that for noting, now they want to charge me a monthly fee. It's their new standard practice for anyone who wants to pay themselves a salary higher than £7488 this year.

    Like many of their customers, I don't want the hassle of an IR35 investigation, so I pay myself a reasonable salary, with the added benefit of ensuring my NI record is up to date.

    Am I alone in thinking this is poor practice on the part of an accountant?

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    Sounds like sharp practice to me. What does your contract / agreement with the accountant say?

    You're the client, if you aren't happy with them then change accountants.
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    Quote Originally Posted by metageek View Post
    I do all my company accounting online, and get a great service, though there are some manual things I need to ask them to do, because I want to pay myself a higher salary than they recommend. Up to now they've done that for noting, now they want to charge me a monthly fee. It's their new standard practice for anyone who wants to pay themselves a salary higher than £7488 this year.

    Like many of their customers, I don't want the hassle of an IR35 investigation, so I pay myself a reasonable salary, with the added benefit of ensuring my NI record is up to date.

    Am I alone in thinking this is poor practice on the part of an accountant?
    Paying yourself a 'reasonable salary' wont make you immune to an IR35 investigation. I'd say the only way you'd 'remove yourself' is by paying your whole contract rate as PAYE not, £10k, £12k, £15k or whatever.

    IR35 is effectively designed to make you pay full tax on your whole rate not pay a little more tax because you are effectively declaring say, £15,000 out of a turnover of £80,000 - £90,000.
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    Default no leg to stand on?

    Annoyingly, it says "The Service calculates salary based on PAYE drawings up to the annual National Insurance threshold and then on the payment of dividends. The service does not operate a monthly payroll."



    Quote Originally Posted by TheFaQQer View Post
    Sounds like sharp practice to me. What does your contract / agreement with the accountant say?

    You're the client, if you aren't happy with them then change accountants.

  5. #5

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    Quote Originally Posted by metageek View Post
    I do all my company accounting online, and get a great service, though there are some manual things I need to ask them to do, because I want to pay myself a higher salary than they recommend. Up to now they've done that for noting, now they want to charge me a monthly fee. It's their new standard practice for anyone who wants to pay themselves a salary higher than £7488 this year.

    Like many of their customers, I don't want the hassle of an IR35 investigation, so I pay myself a reasonable salary, with the added benefit of ensuring my NI record is up to date.

    Am I alone in thinking this is poor practice on the part of an accountant?
    Hi metageek,

    This does seem unfair. A salary above £7,488 would typically involve additional work as a payment of NI (and possibly PAYE) will be due. However, where a salary of £7,488 (or less) is paid there can still be PAYE/NI payments, for example a client with a reduced tax code or a director who has not been a director the full year.

    As per the earlier response in this thread, paying a salary above £7,488 will not necessarily protect you from IR35.

    I hope this helps.

    Martin

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    Quote Originally Posted by metageek View Post
    Annoyingly, it says "The Service calculates salary based on PAYE drawings up to the annual National Insurance threshold and then on the payment of dividends. The service does not operate a monthly payroll."
    Seems reasonable. What you now want them to do is operate a payroll service beyond the NI threshold (which is about £8400ish isnt it?) so as per contract, you have to pay for this.

    You did read their T&C's before signing didnt you?
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    Quote Originally Posted by metageek View Post
    Annoyingly, it says "The Service calculates salary based on PAYE drawings up to the annual National Insurance threshold and then on the payment of dividends. The service does not operate a monthly payroll."
    Price up how much you are paying now. Price up how much the new charge will cost. Then talk to some other accountants and see what they would charge.

    InTouch (who I use) say on their website that their £88 a month includes "Payroll Bureau services for two employees." which I think would cover what you need, but I'm not certain. (If you go with them, mention my referral )
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    Quote Originally Posted by BolshieBastard View Post
    Paying yourself a 'reasonable salary' wont make you immune to an IR35 investigation. I'd say the only way you'd 'remove yourself' is by paying your whole contract rate as PAYE not, £10k, £12k, £15k or whatever.

    IR35 is effectively designed to make you pay full tax on your whole rate not pay a little more tax because you are effectively declaring say, £15,000 out of a turnover of £80,000 - £90,000.
    WBBS. And you won't get an IR35 inspection straight off the bat. You will get a tax inspection first that will lead to an IR35 inspection if past history is anything to go by.

    Accountants differ in their approach to this, some say minimum possible, some say pay a bit of NI. There is no hard and fast rule so go with the one you feel most comfortable with.
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    Quote Originally Posted by northernladuk View Post
    WBBS. And you won't get an IR35 inspection straight off the bat. You will get a tax inspection first that will lead to an IR35 inspection if past history is anything to go by.

    Accountants differ in their approach to this, some say minimum possible, some say pay a bit of NI. There is no hard and fast rule so go with the one you feel most comfortable with.
    If the OP is paying a reasonable salary (say £40k as a thought) then if they are IR35 caught, then there is less for HMRC to go after.

    Whatever the salary, and the thinking behind it, if the OP wants to do that, then they need to either pay the accountants the charges they are asking or move to another accountant.
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  10. #10

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    Quote Originally Posted by metageek View Post
    I don't want the hassle of an IR35 investigation, so I pay myself a reasonable salary, with the added benefit of ensuring my NI record is up to date.
    A "reasonable" salary is not defined anywhere and I've never seen any evidence that paying some voluntary tax is going to make you less of a target for an IR35 investigation. I would say just take the £7488 and put the tax you save towards a fighting fund and a gold plated IR35 investigation insurance.

    As for your NI, my understanding is that the £7488 keeps your NI contributions current, is that not so?

    Quote Originally Posted by metageek View Post
    Am I alone in thinking this is poor practice on the part of an accountant?
    It sounds a bit off because any decent accountant should be able to deal with this for you but as you say in your later post, they make it clear that they aren't in the business of dealing with payroll so that's fair enough I guess.

    You always have the option of switching to a different accountant (there is a sticky of recommended ones in this forum) and you can up your salary then.
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