Taking a break, not trading, salary?

[SimonMac]

I think this is an area where it has become noticiable to people (especially HMRC) when an accountant takes a more than passing role in the running of the company. If you are asking the accountant for advice (can I do this) they say no, then it is up to you if you follow that advice, if the accountant is running the company for you then they are correct in their assumption that you probably sholdn't take a salary (and might have bigger problems as per CK and Boox).

When I am benched for a long period of time I still submit my nil VAT returns, I run a PAYE payroll etc etc, all activites which go towards the running of the company, so I feel comfotablr taking a salary for these actvities.

[youngguy]

the reason they offer any form of discount is to compete with others who also do. And also to reduce the risk of you sacking them off when there’s no work. It’s not really anything to do with effort.

I agree. Its just odd to me that any "real business" would not regularly be negotiating, both it's prices and those of suppliers. One might argue that it is part of the role of a Director to regularly evaluate expenses and the value they bring and make such decisions. Not how HMRC see it of course, despite me instigating the conversation with my accountant.

I can’t see this holding up as evidence of being an MSC, but given HMRC’s focus on MSCs right now I’m not sure I’d be interested in any risk.
maybe ask the accountant for a ‘discount’ for the next years rate if times are so hard?

TBH given the risk, the 1k or so a year is worth paying (for me), just as is keeping the IR35 insurance etc.

I saw the other thread early on but didn't follow it as I've always been so far away from MSC (or so I thought!)

an interesting (partially hypothetical) Question....
I've only just considered asking my accountant to reduce my fees as I just picked up an inside role , but wanted to keep the ltd open as I'm still trying to secure outside work. If this were to become an indicator for MSC, how far back would HMRC go...afterall my ltd hasn't generated any income since a fee reduction.

[eek]

How far back?

hmrc can go back 4 years which means until April 5th 2023 the 2018/19 tax year

[youngguy]

If you are asking the accountant for advice (can I do this) they say no, then it is up to you if you follow that advice, if the accountant is running the company for you then they are correct in their assumption that you probably sholdn't take a salary (and might have bigger problems as per CK and Boox).
.

I guess it will come down to what HMRC decide is running.

I've certainly asked my accountant for advice /options over the years (more so the early years) but they always made it clear the decision was mine and I have often gone another route. I think HMRC are clutching a bit based on a portal and monthly fees, especially if ppl have clear interactions with accountants where they sign off. For example my accountant prepares my VAT but I check it and tell them to go ahead and submit every time and I keep all these emails.

For me not taking a salary would be purely because I have an inside role and can live off that income, so no point drawing from ltd funds and paying additional tax.

But in this climate it clearly isn't worth the risk for saving a few quid on monthly fees!

[cojak]

So I queried this with my accountant and they reiterated their position that as ‘I’m no longer trading they don’t recommend taking a salary as it’s a trading expense’ but then they did ask me to send them the link where I’d read otherwise ?♂️

FYI Even though I’m taking some months off I’m still in touch with recruiters / my network / colleagues and responding to requests for work (yesterday) and reviewing VAT returns, sorting self assessment, updating LinkedIn etc.

Going back to bownyboy: I would say “Thanks for the advice, I’ve noted it - now follow my instructions/this is what I am going to do”

As the more qualified here have stated, you can take salary in the instance you’ve described. You run your company, not Gorilla.

(And you don't need to do their work for them by digging out links to prove this - just tell them to do it, end of conversation.)