Advice needed please re: accountant

**Darren@UptonAccountants** · 20 May 2010, 14:43

Salary

Can't see why you're not allowed to pay the salary....there maybe reasons why it's not the best idea but that's not the issue.

As long as there is cash available, then salaries can be paid. Dividends are another solution provided there are retained earnings from which to pay them.

P35 was due in yesterday.

**Cloud9Umbrella** · 20 May 2010, 15:15

Originally posted by Batcatz View Post

Hi, my situation is I haven't had a contract since Oct 2008. <my choice> I started paying myself £475 salary a month in April 09. This was from profit left in company and my intention was to keep up the N.I contributions. I checked with my accountant who sent me info. I received year end report for 2009 today and Accountant had put nothing in the salary section, but instead counted it as dividend payments.

I phoned him and he said that as my company had not traded I couldn't pay myself a salary. Is this right? He also mentioned P35. They originally said I could pay myself a salary. I am trying to stay calm, but if I had known this in April '09 I could have taken the profit out of the company and put it in a decent savings or ISA account.

I find accountant rather hard to talk to as he just ends up repeating things back to me rather than explaining! I am thinking of changing accountants.

Thanks for any advice,

If you have funds available then you would still be able to pay yourself a salary. Even if this wasn't the case, your accountant should have advised you that they wouldn't be honouring your request instead of just going ahead without advising you first.

PM me if you need any further detail as we provide accounting as well as umbrella services.

**Sally BFCA** · 20 May 2010, 15:19

Unless your PAYE scheme has been cancelled you were due to file a P35. If your accountant filed a NIL return it will need to be amended and re-submitted (there is a 7 day grace period on the filing starting today, although it is at their discretion, I believe)

As Darren says, there is no reason not to pay a salary, it makes sense for your state pension NICS contributions. If the company were properly dormant then, no, you couldn't have a salary. You are simply not currently trading, not dormant.

**Robot** · 20 May 2010, 15:29

Originally posted by Batcatz View Post

Hi, my situation is I haven't had a contract since Oct 2008. <my choice> I started paying myself £475 salary a month in April 09. This was from profit left in company and my intention was to keep up the N.I contributions. I checked with my accountant who sent me info. I received year end report for 2009 today and Accountant had put nothing in the salary section, but instead counted it as dividend payments.

I phoned him and he said that as my company had not traded I couldn't pay myself a salary. Is this right? He also mentioned P35. They originally said I could pay myself a salary. I am trying to stay calm, but if I had known this in April '09 I could have taken the profit out of the company and put it in a decent savings or ISA account.

I find accountant rather hard to talk to as he just ends up repeating things back to me rather than explaining! I am thinking of changing accountants.

Thanks for any advice,

If you didn't trade and took a salary of £475 per month where you expecting this salary to create a loss in the accounts, so that you could carry that back to reclaim some corporation tax paid on previous years profits?

Have you missed out on two counts, no NI contributions and no corporation tax recoverable

That aside, I agree with both above, if you gave your accountant instructions to run payroll to keep your NI conts up then they should have done that. Time to dump the accountant, for not obeying your simple instructions.

**Batcatz** · 20 May 2010, 19:52

Thanks, for all your replies. It is much appreciated.
Darren, I signed and sent back a screen print of the P35 in April.
I expect it showed NIL earnings, but I didn’t pick up on this at the time. My fault.
Sally, as far as I am aware the company isn’t dormant and is just not trading as you said. It is just ticking over. I am still sending of VAT returns and agreed with Accountant in April ’09 that the payroll should be running until I stopped it.
Robot, I paid myself £475 so that my N.I contributions would be up to date and not to reclaim corp tax. The year end report indicates I will get a Corporation Tax refund of about £153. So, I have only missed out on N.I contributions.

I will write a letter to the Accountant explaining the situation again, with copies of the pay schedule that was sent back in April last year and see if he will change the P35 and year end report. I will make a point that the company is not dormant and that we agreed I would pay myself.

Fingers crossed. As soon as I get a new contract I will change accountants!

**Clippy** · 20 May 2010, 21:01

Originally posted by Batcatz View Post

Fingers crossed. As soon as I get a new contract I will change accountants!

As you are currently out of contract, therefore having the time, and your year end has passed, there may be some merit in changing accountants once you get the situation sorted with your current one.

**Batcatz** · 2 August 2010, 12:21

Update

I had the argument with the accountant. He phoned me and said, that's not how we do it here and that they shouldn't have agreed to restart the payroll. No apology. Just repeated all the same stuff back to me when I said I was not happy.

I've nearly been out of contract for nearly 2 years and am just thinking about going on Jobseekers allowance while I look for contracts, but I will be refused Contributions based JSA. (Just phoned N.I enquiries) I might get Income based at a reduced amount due to still having savings.

Oh and it will cost me £421.20 to pay back 08/09 to get back the 1 year towards pension.

The accountant is currently doing my personal tax return so once he has done that I can look for a decent one!

Wierd thing is my contractor friend who recommended him was able to pay himself a salary for a good few years. This was a while ago though.

Advice needed please re: accountant