Accountant not helping

[Workbot]

Hi Guys,

Been lurking on this forum for a while and learned a lot.

I am a LTD company with me as the only employee. I am contracting in UK.

My accountant is not keen on me using the minimum pay with dividends process that seems to be recognised as the most tax / NIC efficient method.

I remind you that dividends can only be paid out of profits of the company and that some form of management accounts should be prepared to demonstrate that there are sufficient profits. It is not sufficient to simply say I have cash in the bank and so must have sufficient profits to pay a dividend. Any illegal dividends will have to be repaid to the company.

Is he just doing his job?

CHEERS

[Olly]

The quote from them seems pretty reasonable, "don't draw dividends unless you are sure you have the profit to do so"

I don't really like his wording "illegal dividends"...if you stuff it up then you call it a loan at end of year totting up time and all is good.

What do you mean by "minimum pay"?

Answer to your question...he's being overly cautious.
Do it the way the rest of us do!

[northernladuk]

It depends on what you have asked him to do for you? His job is to do what you pay him for.

He is right in what he says so I would suggest that you haven't asked him to do this as part of his service to you.

If you said ok fine how much and he gives you a figure you are back on track.

[TheFaQQer]

The quote from them seems pretty reasonable, "don't draw dividends unless you are sure you have the profit to do so"

Agreed - he is correct.

I don't really like his wording "illegal dividends"...if you stuff it up then you call it a loan at end of year totting up time and all is good.

Not sure about that - he is correct in that if you illegally declare a dividend, then you have to repay it. What he could / should have said is something like "but we could always reclassify that as a loan", which might be what he would have said but not written

[Pondlife]

Agree with FAQ but would add that the OPs Acc is probably saying it to stop the OP getting over zealous with the VAT/CT monies owed but still in the back account.

[doodab]

Agree with FAQ but would add that the OPs Acc is probably saying it to stop the OP getting over zealous with the VAT/CT monies owed but still in the back account.

Yes, you should definitely take those as a loan instead.

[Olly]

Yes, you should definitely take those as a loan instead.

Errrrr..........you what?

Muppet!!

[doodab]

Errrrr..........you what?

Muppet!!

Erm, humour, but with a kernel of truth.

Although it's not recommendable you can actually borrow this money. The loan appears as an asset on the balance sheet and the company remains solvent. As long as it meets it's obligations, no problem.

[LisaContractorUmbrella]

I think what your accountant is saying is that you haven't taken costs into account which may be due or owing from the money that you currently have in the bank. For example, VAT is payable quarterly and therefore that money needs to be put to one side so that you have it available when it becomes due.

[Olly]

Erm, humour, but with a kernel of truth.

Although it's not recommendable you can actually borrow this money. The loan appears as an asset on the balance sheet and the company remains solvent. As long as it meets it's obligations, no problem.

Sorry was lost on me....you need to put the smiley face in.

Realise you can borrow the money, but over 5K and you end up paying hefty interest on the the full loan.