Tax Credits (Another question)

[Support Monkey]

Sadly that is not how HMRC see it and it is how HMRC see it that people need to think about....

so if I go and borrow money from a bank on a credit card or from my Nan or anywhere else and use that money to live on for 6 months and then pay it back how can that be earnings, its not your money in the first place and never is, is that not what the term "loan" means

surely regardless of where it comes from a loan needs to be paid back , unless that loan get written off in which case it would then become earnings

[eek]

so if I go and borrow money from a bank on a credit card or from my Nan or anywhere else and use that money to live on for 6 months and then pay it back how can that be earnings, its not your money in the first place and never is, is that not what the term "loan" means

surely regardless of where it comes from a loan needs to be paid back , unless that loan get written off in which case it would then become earnings

Sadly there are a lot of people who have posted in HMRC Scheme Enquiries who would disagree with you....

[Snarf]

I don't believe they will accept 'converting' the loans to dividends retrospectively. Quite right too.

Now Im confused, Im not "Converting the loan to a dividend" I'm taking a loan and paying it back with my personal income - the fact that the personal income in this case has come from a dividend shouldn't matter.

How does everyone else pay back directors loans?

[tractor]

....

Now Im confused, Im not "Converting the loan to a dividend" I'm taking a loan and paying it back with my personal income - the fact that the personal income in this case has come from a dividend shouldn't matter.

How does everyone else pay back directors loans?

That was not what I was trying to say at all.

What I meant was that if you were inspected and HMRC determined that you were taking regular loans and that they should be treated as salary, it would be no good you saying 'ok, it was a dividend then' to avoid the Employer/Employee NI on the amount which they would demand along with any penalties and interest that they deemed payable.

Yes, there are a lot of 'if's' there and the risk is entirely yours. The above scenario is not unheard of. You may of course be lucky and never get investigated at all. Of course HMRC have never had more than a passing interest in contractors after all

What amazes me is that people come here for advice and when they get it, they are miffed because it doesn't correlate with their rosy, usually one-sided view of the world.

[Snarf]

What amazes me is that people come here for advice and when they get it, they are miffed because it doesn't correlate with their rosy, usually one-sided view of the world.

I'n not miffed in the slightest, it doesn't affect me either way, I didn't think that we would get anything anyway so there is no loss, if we do legitimately get something then its a bonus.

What I am miffed about is the contradictory advice - based on peoples opinions of the situation rather than actual experience... What is interesting is the posts from people who have been through the same thing match up to what my accountant(s) and HMRC have now told me... everyone else is giving their opinion as if it was fact.

[Support Monkey]

Sadly there are a lot of people who have posted in HMRC Scheme Enquiries who would disagree with you....

All those issues are related to people taking loans as salary then the loan being written off or manipulated to allow the recipient to keep the money with no penalty

In this case the OP is saying he will be paying this back, the OP has taken a loan (what he uses it for is up to them) and If they pay back the loan then it cannot be seen as salary by HMRC. so he should just enter salary and dividends/other income on the form

If however he decides to not pay it back then yes this is going to be seen as salary and they are going to be in trouble and they should then put the amount down on the tax credit form

[SlipTheJab]

I'n not miffed in the slightest, it doesn't affect me either way, I didn't think that we would get anything anyway so there is no loss, if we do legitimately get something then its a bonus.

What I am miffed about is the contradictory advice - based on peoples opinions of the situation rather than actual experience... What is interesting is the posts from people who have been through the same thing match up to what my accountant(s) and HMRC have now told me... everyone else is giving their opinion as if it was fact.

Welcome to CUK

[Snarf]

Welcome to CUK

[tractor]

....

Welcome to CUK the internet

If you wanted qualified, unbiased advice you should have gone to an accountant/specialist lawyer/doctor for it and paid

[northernladuk]

What I am miffed about is the contradictory advice - based on peoples opinions of the situation rather than actual experience... What is interesting is the posts from people who have been through the same thing match up to what my accountant(s) and HMRC have now told me... everyone else is giving their opinion as if it was fact.

Welcome to trying to run your business by relying on anonymous internet forums.