Can I mix my salary with dividends?

[northernladuk]

Having been involved in investigations, I can tell you it's a lot quicker to handle them if you can show the bank statements and clearly match individual payments to wage summaries and dividend vouchers. <and more stuff>

They way it was explained to me is that if can provide clear evidence of an aspect of your finances the investigator maynot be so eager to go in to minute detail and move on to the next issue. He is often looking for due diligence rather than lost pounds. Give him the idea you know what you are doing and he won't dig too deep. That's why I keep all my reciepts so if he questions mileage he gets a huge bag of them. If he wants to wade through and validate he can but banking he won't and move on. If he does it was worth the effort.

Prolly not true for every investigation but if it helps just once I think it is worth getting in to the habit.

I didn't think payments would make a difference though but what Clare makes sense to me so will splitting mine just to look whiter than white if nothing else.

[TheFaQQer]

Is this the one?

Contractor Accountant specialists UK | Accountancy Service for contractors | Interim Managers Accountancy Services UK | Take Home Pay Calculator UK.

No - it wasn't an accountant, it was a regular poster.

I wish I could remember who it was, it's been most useful. Having just looked at the NW one, I prefer the one I use - too much yellow

[malvolio]

not having a go, just looking for proof that one payment is riskier than multiple.

Well I can't quote precise case details, but I do know of people having arguments with a Hector about what a given payment represented and having significant amounts of non-taxable income disallowed, leading to expensive appeal procedings. Whether it's provable or not is not the point; blame my original accountancy training but all I'm saying is paying things with clearly identifiable transactions is a basis tenet of any auditable process since it eliminates ambiguity and de-sisks the whole process

[Joeman]

Having been involved in investigations, I can tell you it's a lot quicker to handle them if you can show the bank statements and clearly match individual payments to wage summaries and dividend vouchers. If you can't, you then have to provide backup schedules to show how each payment relates to a voucher or payslip plus which expenses it included. Preparing a tax return for someone who has just paid random amounts and then expects you to reconcile it at year end against a wage summary and non-existent dividend vouchers is also no fun. If your accountant includes full investigations and your tax return at no extra charge then great. If they are going to bill you for the investigation/return on the basis of how much time and effort it takes them, it's going to cost you more.

It's a lot easier for you to get into a mess that way too, as you can't clearly look back and identify payments yourself.

The mortgage company would be unlikely to be purely looking at your bank statements and lending on the basis of what you've paid in (that doesn't prove what you earn, just what you pay in which could come from numerous sources unrelated to ongoing income). They would write to your accountant and request details of your company profits, dividends and wages.

thats some great info from a validated source.. thanks

I use a system called 'IRIS Open Books' to manage my LtdCo finances that allows me to upload my bank statements, then assign an explinations next to each transation.
Lets say i transfer 2k to my personal account, that shows as a single transaction on my LtdCo bank statement, but IRIS OpenBooks allows me to split that transaction into multiple payment types, so that could be
500 salary,
500 expense,
1000 dividens.

This is why ive only been making single combined payments, as IRIS software clearly details that a single transaction can have multiple reasons.
If its bad practice then maybe i should stop using this feature of the software?? but its handy for me as i can juggle the split between Expenses/Divs when i get round to adding up my expenses! Guess im just lazy...

[malvolio]

thats some great info from a validated source.. thanks

I use a system called 'IRIS Open Books' to manage my LtdCo finances that allows me to upload my bank statements, then assign an explinations next to each transation.
Lets say i transfer 2k to my personal account, that shows as a single transaction on my LtdCo bank statement, but IRIS OpenBooks allows me to split that transaction into multiple payment types, so that could be
500 salary,
500 expense,
1000 dividens.

This is why ive only been making single combined payments, as IRIS software clearly details that a single transaction can have multiple reasons.
If its bad practice then maybe i should stop using this feature of the software?? but its handy for me as i can juggle the split between Expenses/Divs when i get round to adding up my expenses! Guess im just lazy...

Just occasionally you wonder why you bother...

[Joeman]

Just occasionally you wonder why you bother...

ok all im saying is that with everythin equal, ie a demonstrable audit trail in an accountant supplied software package, accompanied by detailed payslips, printed and signed paperwork for dividends, scanned and hard copy receipts for every purchase etc etc and all other paperwork in order, is the fact that the payment was made in a single transaction rather than three transactions spaced a few seconds apart, really going to swing the case in the favour of the tax man?

That’s the question… you obviously believe it does and that’s fine, all I’m doing is trying to get a definitive answer.

When single payments have worked for many years for me, I wonder why you bother to do something that you have no hard evidence to support…

[malvolio]

ok all im saying is that with everythin equal, ie a demonstrable audit trail in an accountant supplied software package, accompanied by detailed payslips, printed and signed paperwork for dividends, scanned and hard copy receipts for every purchase etc etc and all other paperwork in order, is the fact that the payment was made in a single transaction rather than three transactions spaced a few seconds apart, really going to swing the case in the favour of the tax man?

That’s the question… you obviously believe it does and that’s fine, all I’m doing is trying to get a definitive answer.

When single payments have worked for many years for me, I wonder why you bother to do something that you have no hard evidence to support…

They've worked because you haven't been investigated. If you're never investigated you can do it whatever way you like. But I'm not going to answer questions on the basis that whatever it is won't be investigated by HMRC so who cares. And that wasn't what you asked originally anyway.

Also your software tool does not override HMRC's ability to apply the Ramsay principle and how you manually label the transaction on your PC is utterly irrelevant. To his eyes they are discrete payments with distinct taxation treatments, therefore should be treated separately. That's the reality, you do with it what you wish.

[Joeman]

They've worked because you haven't been investigated.

So looking at this another way then, has anyone been investigated that has been paying themselves Divs and Salary on same transaction? what was the outcome?

[John Crowe]

So looking at this another way then, has anyone been investigated that has been paying themselves Divs and Salary on same transaction? what was the outcome?

everyone always coming up with scare stories about being investigated, so who has then? a few pointers on dos and donts?

my accountant has been doing the div paperwork, I just put the amount in the online system and he does the rest

[gingerjedi]

I do separate transactions for my own benefit and for clarity, it takes me about 20 seconds longer.

I can't be arsed to read the entire thread but I'm willing to bet the op has spent more time asking the question, reading and replying rather than doing it the simple way 12 times over a year.