Low Salary High Divvies

[Clare@InTouch]

but what defines "artificially low"?

In theory, one that isn't commercially realistic given the work you do.

But you could argue your salary is reimbursement for your duties as a director, not those of Project Manager/Software Developer/Whatever.

[DirtyDog]

In theory, one that isn't commercially realistic given the work you do.

But you could argue your salary is reimbursement for your duties as a director, not those of Project Manager/Software Developer/Whatever.

But they'd have to investigate exactly what you did to determine whether your salary is commercially realistic, though.

Sounds like scaremongering to me.

[Clare@InTouch]

But they'd have to investigate exactly what you did to determine whether your salary is commercially realistic, though.

Sounds like scaremongering to me.

Agreed.

[VectraMan]

But they'd have to investigate exactly what you did to determine whether your salary is commercially realistic, though.

Yes but in most these cases people are earning a salary below minimum wage, and that's obviously not commercially realistic (or indeed legal if a normal employee). If the amount you earn just happens to be exactly the right amount to minimize your tax bill, then that's almost certainly artificial.

[Jog On]

Is it illegal to pay an artificially low salary?

What exactly does "commercially realistic" mean?

It al sounds very whooly...

[DirtyDog]

Yes but in most these cases people are earning a salary below minimum wage, and that's obviously not commercially realistic (or indeed legal if a normal employee). If the amount you earn just happens to be exactly the right amount to minimize your tax bill, then that's almost certainly artificial.

I don't know what the commercially realistic salary is for a director, which is all my company pays me for. As an officer of the company rather than an employee, I don't have to get paid minimum wage.

As I said before - bring it.

[GB9]

But they'd have to investigate exactly what you did to determine whether your salary is commercially realistic, though.

Sounds like scaremongering to me.

Having low salary and high dividends isn't necessarily a problem. All HMRC has said is that it uses these as criteria for identifying investigation subjects. Presumably as it yields decent returns.

[malvolio]

Having low salary and high dividends isn't necessarily a problem. All HMRC has said is that it uses these as criteria for identifying investigation subjects. Presumably as it yields decent returns.

Yeah, right.

About £1.1m last year from 256 cases opened, of which a third resulted in no tax being due. The rest were "resolved", meaning, presumably, that the contractor paid up without fighting over paying a tax they may well not actually owe..

That "decent return" - an average £6k per case closed - doesn't even cover the cost of the inspectors' wages

[d000hg]

Is it illegal to pay an artificially low salary?

What exactly does "commercially realistic" mean?

It al sounds very whooly...

It doesn't need to be illegal if they are only using it as an indicator who to investigate for things which ARE illegal, does it?

[Zero Liability]

Didn't we just do this thread?

It makes sense for them to target the cases where they have to most to gain; in fact as taxpayers we should be demanding that they do.

So would that not be cases where dividends are extraordinarily high relative to the salary, i.e. contractors with high turnovers?