Salary Payments

[WetBehindTheEars]

I am with a general purpose high street accountant.

I have been hearing different points of view from the IT contractors I have worked with and wondered if this group would care to comment.

Under advice from my accountant I pay myself a salary of £100 per week. I do not pay any National Insurance. I take regular dividends.

Other contractors have winced when I have mentioned this. They say I am asking for trouble. Told me low salary payments == certain investigation.

What are the downsides of my model. Is increased likelihood of investigation a real fear or an urban myth. Anything else I should be aware of?

[Gonzo]

I am with a general purpose high street accountant.

I have been hearing different points of view from the IT contractors I have worked with and wondered if this group would care to comment.

Under advice from my accountant I pay myself a salary of £100 per week. I do not pay any National Insurance. I take regular dividends.

Other contractors have winced when I have mentioned this. They say I am asking for trouble. Told me low salary payments == certain investigation.

What are the downsides of my model. Is increased likelihood of investigation a real fear or an urban myth. Anything else I should be aware of?

If everything in your company is in order then why fear investigation?

This has been done a few times on here, sadly the HMRC have not been good enough to see fit to post the definitive answer, so all we have is opinion to go on.

In a nutshell, some accountants recommend NMW, some recommend £5000 a year as salary as it is more tax efficient.

Some people like paying tax and pay a salary far above these. After all, "its only fair".

Here's a link to where this has been covered before.
http://forums.contractoruk.com/accou...ay-myself.html

[SueEllen]

If your general purpose high street accountant deals with other small services firms then they know what they are doing.

BTW This topic has been done to death and caused lots of arguments. (Use the search facility and you can find them.)

[Bluebird]

I am with a general purpose high street accountant.

I have been hearing different points of view from the IT contractors I have worked with and wondered if this group would care to comment.

Under advice from my accountant I pay myself a salary of £100 per week. I do not pay any National Insurance. I take regular dividends.

Other contractors have winced when I have mentioned this. They say I am asking for trouble. Told me low salary payments == certain investigation.

What are the downsides of my model. Is increased likelihood of investigation a real fear or an urban myth. Anything else I should be aware of?

As a Director of a company you are not obliged to pay any salary, some accountants say that to pay mimimum wage takes you out of the "line of fire" of Hector, others disagree - there is not sufficient evidence [ that I know off ] to prove either model right or wrong, although the Min Wage one makes sense.

At the end of the day, it's a persoanl choice.

[WetBehindTheEars]

I apologise for opening a thread on a subject that has been done before. I will search the history in future.

I don't fear investigation as such, I have taken all the necessary precautions (I think). However, I feel most contractors fear investigation. Who knows what might happen. Many an innocent man has been convicted of a crime they did not commit. I'd rather avoid an investigation if I could.

I know a couple of guys who were investigated and they have said it is not a pleasant experience. One guy said he got to the point of having panic attacks when any brown envelope came through the door. If it had HMRC on the front he totally freaked out and dare not even open it. He had to ask his wife to open it. LOL.

I want to keep as much hard earned money in my pocket as I can but don't want to sail too close to the wind.

[Kess]

If your friend has any unopened HMRC brown envelopes left lying around then it might be worth him opening them - there could be a couple of valuable CDs inside...

[kirk]

If your friend has any unopened HMRC brown envelopes left lying around then it might be worth him opening them - there could be a couple of valuable CDs inside...

[WetBehindTheEars]

That's genius.

[xoggoth]

A £100 PER WEEK?? Look old chap, paying yourself weekly is really common. What are you, some sort of shop assistant or shelf stacker or something? Real class sorts pay salary as a lump sum director's bonus by 31st january following the end of the financial year in question.

Seriously, I suppose if you are unlucky, what you have in the records will matter, but I reckon that investigations are mostly chance in the first instance. However, don't forget that (unless you are caught by IR35 obviously) there is no such thing as not paying enough salary as a director is not an employee without a contract that says so.

Some have said on here that too regular a dividend can be deemed to be salary. I would be interested if anyone can point to any law or case that supports that.

PS I find that never a week passes without some brown envelope from the crappy HMRC. They have nothing better to do.

[TheFaQQer]

I would have thought that you are best off paying enough salary to get the basic NI stamp, rather than not paying NI at all.