Can Taxman get money removed from company

[QwertyBerty]

I've never paid for a review, but I have read the guides and looked at the contract and used my brain to judge that the terms of the contract put me outside IR35 according to the best advice from the PCG. Is that not reasonable care?

Agreed, same here. I also keep all the emails to agencies requesting changes to the contract which I hope shows I actually read the thing and have some clue about IR35. I also ask the client when I leave to sign a piece of paper to say I worked independently as a consultant and so forth.

QB.

[tim123]

Is that your opinion or are you qualified to answer the question? I agree with what you are saying, but is it enough reasonable care? I think it would be for a judge, but I doubt if it would be enough for Hector.

I said that it was the absolute minimum required.

This still leaves the possibility of Hector wanting more

tim

[tim123]

I'm saying they don't need to claw back anything from you directly. They just don't grant you the dividend tax break on the money you've earned and you get some extra tax on your SA account.

.

The extra "tax" due on the Dividend will actually be NI.

They can't reclaim this simply be reassessing your Tax return.

That is the problem here

tim

[Jubber]

Many thanks Tim - that'll do for me.

I wonder if Dragonfly had 99k lying around in the business account or not? Will be interesting to know what the next part of that story is (poor sod)

[THEPUMA]

We've gone through this in some detail in the past (see http://forums.contractoruk.com/accou...5-loses-appeal).

A dividend does not become retrospectively illegal if it was legal at the time it was declared. So, if you make £10K profit after tax one month and pay a dividend of £10K (assuming accumulated reserves brought forward are nil), the fact that you make a loss the following month doesn't make the original dividend illegal.

The case referred to on the link is materially different circumstances than we are talking about here as the company was making a loss at the time the dividends were paid and therefore the directors were negligent in paying the dividend.

This issue is one of the major drivers for HMRC bringing in the third party debt transfer rules as part of the MSC legislation, as they had been unable to enforce collection of IR35 liabilities from clients of Giant etc even where they had established that IR35 should have applied.

[VectraMan]

The extra "tax" due on the Dividend will actually be NI.

Good point.

I wonder if Dragonfly had 99k lying around in the business account or not? Will be interesting to know what the next part of that story is (poor sod)

Wasn't it more like £30K? IIRC the £99K was the total tax bill, and he would have paid £60-odd K as CT already.