No Salary for accounts

**northernladuk** · 28 March 2014, 17:10

Originally posted by fitzy73 View Post

My company year ends at the end of Sept. From Sept 12 to Jan 13 I was between contracts and told my accountancy co I wouldn't be taking a salary or dividends.

From Jan 13 I have been in a contract. I have being paying myself a salary and dividends. Due to the reporting requirements from Vector I was advised by my accountancy co to pay a salary once a year in March / April.

My accounts from Sept 12 to Sept 13 are now being done, and my accountant tells me that I will have no salary to show for the year.

This means my corporation tax bill is massive.

Won't it also be a problem you have been paying yourself a salary but your accountant hasn't been putting and RTI in at the right time? Why does he think there isn't any salary to show when you have been paying yourself it? Were you paying more for the fewer months to make full use of the tax threshold or just carried on at the same rate you would if you were paying for 12 months?

Q. Should my accountants have pointed out the negatives of not taking a salary? I was unaware that by taking one annual salary I'd be left exposed.

Not really. You TOLD him you wouldn't be taking one. I have to ask why did you stop taking a salary between contracts though. You are still employed by your Limited but just still on the bench. Maybe what you should have done is ASK your accountant what the best option was.

Q. Will Hector think it odd that I am not taking a salary?

He won't give a hoot but won't be best pleased if you have been paying it and not doing the RTI reporting correctly. Some creative accounting should get around that though.

Any advice greatly received. Though please don't say "you are the director, you should have know about the salary reporting" - that is why I pay over a grand a year to an accountancy firm for!

Indeed you if you are paying them shouldn't you be asking their advice rather than telling them to do something and then looking to blame them.

**northernladuk** · 28 March 2014, 17:12

Due to the reporting requirements from Vector I was advised by my accountancy co to pay a salary once a year in March / April.

I don't think this is true. He is stating yearly as it is less work for him. Personally tell him to stuff that and pay yourself monthly. No way do I want money sitting in a no interest account for up to a year when I could have it out doing something for me. That's my personal opinion on it. Many accountants suggested people went to yearly pay reporting but that isn't dictated by HMRC at all.

**Clare@InTouch** · 28 March 2014, 17:13

If you're taking an annual salary then you'll still get tax relief, but it will be in the next accounting year rather than spread across two so it's more of a cashflow issue. Annoying though, so your accountant should have mentioned it as a knock on effect.

Hector shouldn't care as you'll have a salary for tax year purposes. I believe some other larger accountants actually recommend annual salary as it's the only real solution for RTI purposes, unless you file each client individually when they make payment (which would be nightmare if you have more than 10 clients!)

**northernladuk** · 28 March 2014, 17:14

Originally posted by Clare@InTouch View Post

If you're taking an annual salary then you'll still get tax relief, but it will be in the next accounting year rather than spread across two so it's more of a cashflow issue. Annoying though, so your accountant should have mentioned it as a knock on effect.

Hector shouldn't care as you'll have a salary for tax year purposes. I believe some other larger accountants actually recommend annual salary as it's the only real solution for RTI purposes, unless you file each client individually when they make payment (which would be nightmare if you have more than 10 clients!)

Are you able to give us an clue of the split between people yearly and people who insisted on staying monthly with you?

**captainham** · 28 March 2014, 17:16

Regardless of what your accountant should or shouldn't have told you, you should really have at least a basic grasp of how your CT is worked out, i.e., expenses such as salary reducing the overall bill.

Having said that, there are plenty of accountants who post on here who may well have queried your original intention...but ultimately you should be asking for your accountants opinion, don't just expect to be given it if you have started off with a statement as opposed to a question.

**Clare@InTouch** · 28 March 2014, 17:18

Originally posted by northernladuk View Post

Are you able to give us an clue of the split between people yearly and people who insisted on staying monthly with you?

Every single client of ours pays monthly and we submit RTI monthly for them. I believe SJD had an annual option.....?

**TheFaQQer** · 28 March 2014, 17:18

Originally posted by fitzy73 View Post

This means my corporation tax bill is massive.

This sounds like a cashflow issue - surely next year there will be a big salary in the accounts, so the tax bill for next year will be reduced accordingly?

**northernladuk** · 28 March 2014, 17:21

Originally posted by Clare@InTouch View Post

Every single client of ours pays monthly and we submit RTI monthly for them. I believe SJD had an annual option.....?

Yeah, the letter was suggested that yearly was the default option (I think) but contact them if you wanted to stay monthly. Just sent a mail and carried on as normal. They were ok about it all.

**northernladuk** · 28 March 2014, 17:22

Originally posted by captainham

InTouch are happy for monthly payments...they just file RTI at month end, but you can pay yourself at any point before that during the month if you wish. I think this is even the default position (as opposed to the 'easier' annual option being the default unless you insist otherwise).

Is that right? I thought the dates between filing and paying had to be pretty close. I agreed a date that I would pay myself on every month and the accountant did what he needed to based on my date.

No Salary for accounts