Reply to: Bit of a One-Off

[WordIsBond]

I can respect that, an abridged version on the bit I was actually talking about would be nice though

You're talking to Mr Long-Winded, you know. Miracles don't happen on CUK, quit asking for them.

tl;dr, employing your spouse is far less dodgy than closing one company and opening another three months later

Neither is necessarily dodgy but one is more likely to draw the ire of HMRC than the other.
/pedant

[pr1]

I can respect that, an abridged version on the bit I was actually talking about would be nice though

tl;dr, employing your spouse is far less dodgy than closing one company and opening another three months later

[northernladuk]

Why did I write it all? Maybe because you keep having your say on this and I wanted to have mine.

I can respect that, an abridged version on the bit I was actually talking about would be nice though

[WordIsBond]

Didn't read it? LOL. Oh, well, you are still one my favourite guys to read on CUK.

Why did I write it all? Maybe because you keep having your say on this and I wanted to have mine.

Carry on invoicing.

[northernladuk]

Dunno why you wrote all that. My original comment was about pay not shares and her doing enough to justify.. CBA to read all that TBH.

[WordIsBond]

Not at all. It miffs me when new guys come in questioning how much tax they can save using their wife as a tax mule which is the wrong approach. It's not a right, it has to be justifiable and in a majority of cases it's far from that which brings risks that can outweigh the savings. I'll always play devil's advocate in these situations. If people DGAF about doing this properly then why do they bother with IR35, 24 month rule, claiming any old course through the company etc.

I'll always point out the rules around this like a belligerent old sod and when they've got their head around it it's up to them to manage the risk. Just saying yeah sod it pay her the max is very poor advice IMO.

That's all great, but a few things are pretty clear.

(a) Ever since the Arctic Systems case it is settled law that any share split with a spouse is legal, as long as the shares have equal rights, and are not just dividend rights. It is legal to give your spouse shares, and it is not considered "aggressive avoidance."

Take away fact #1: there is nothing dubious, risky, or anything that has to be "justifiable" in any share split used. You can do 50-50, 30-70, or 70-30. .

(b) There is nothing in law preventing a spouse or anyone else with a relatively clean legal history from becoming a director.
(c) When the decision to accept / not accept one contract or another impacts family time and family finances, it is appropriate for that decision to be discussed in detail with a spouse. Since a spouse is often heavily involved in the most important decisions for YourCo, and significantly involved in the support structure that makes it possible, it is completely appropriate to have a legal structure that reflects that by making the spouse a director.

Take away fact #2: It is entirely legal and appropriate for spouses to both be directors of a contractor limited company. There is nothing dubious here or that has to be justified.

(d) Anyone else who served as a non-exec director for YourCo would expect to receive some level of compensation for the time involved, for the advice they give, as well as the legal responsibilities and the potential liability they incur. The market value for a non-exec director of a small limited co may not be tens of thousands of pounds, but it is not nil.

Take away fact #3: It is easy to justify some level of director's salary for a spouse. It would be impossible, given the market data available, for HMRC to argue that director's compensation of £5K, or even more, is inappropriate. You can pay your spouse at least £5K for being a director alone.

(e) Anyone else who does bookkeeping, etc, on a part time basis is going to cost you something. It is easy to justify a salary, for these services, of £2-3K.

Take away fact #4: If a spouse does bookkeeping AND is a director, it is easy to justify a salary of £7-8K.

I don't think any of that is in doubt at all. A spouse's salary of £8K (when the spouse is a director and does bookkeeping), unsurprisingly, is something HMRC has never challenged. And the difference between £8K and £11K, if people go to that level, is so small that it also would be almost impossible for them to challenge, and the return on it for HMRC if they did win would be negligible. I can't imagine them ever going after this without some kind of substantive change first to the settlements legislation.

The right (it IS a right) to give a spouse shares, to appoint a spouse as a director, and to pay a salary for that service and additional salary for any other services the spouse provides, is settled law.

Far more doubtful, harder to defend, is opening a company three months after taking advantage of ER to close a company that did the same thing. I don't have any real problem with what you did, but before going on about others doing something clearly within the law, you might remember that you yourself have done something which is much more open to legal challenge. I know you had advice from multiple accountants, but those who make their spouse a director and pay a salary of £8-11K have the same, plus a clear legal precedent.

[pr1]

@pr1, you always seem very concerned with others taxation levels, rates etc. to the point of having a complex.
You don't come from a long line of family HMRC employees do you?
So, I have to ask, as the good citizen that you are, comrade, do you pay the taxman more than you have to?

Maybe I feel sorry for you, treacle.
I'll ask again:-
do you pay the taxman more than you have to?

yes

So you pay as much as a perm would, in the terms of taxes, NI etc.
If so, I take back any criticism I previously had, you must be running a charity.

the forum lists posts in chronological order, HTH

[MrMarkyMark]

i did answer your original question, you were the one that phrased it badly

Hardly:-

So you pay as much as a perm would, in the terms of taxes, NI etc.

[pr1]

Ah, then you didn't answer my original question.
I will rephrase, as, as usual, you have spectacularly missed the point. .

Do you avoid paying as much tax as a perm by reducing your tax liability i.e.uaing a LTD, taking advantage of low self salary payments, deducting expenses from profit and taking dividends?

And don't worry, I live plenty .

i did answer your original question, you were the one that phrased it badly

[MrMarkyMark]

Ah, then you didn't answer my original question.
I will rephrase, as, as usual, you have spectacularly missed the point. .

Do you avoid paying as much tax as a perm by reducing your tax liability i.e.uaing a LTD, taking advantage of low self salary payments, deducting expenses from profit and taking dividends?

And don't worry, I live plenty .

[pr1]

So you pay as much as a perm would, in the terms of taxes, NI etc.

If so, I take back any criticism I previously had, you must be running a charity.

you don't have to be running a charity to want to take out & spend more than the basic rate tax limit, especially if you want to live a little

[MrMarkyMark]

yes

So you pay as much as a perm would, in the terms of taxes, NI etc.

If so, I take back any criticism I previously had, you must be running a charity.

[pr1]

Maybe I feel sorry for you, treacle.

I'll ask again:-

do you pay the taxman more than you have to?

yes

[MrMarkyMark]

you seem very concerned with me, you're like a lost puppy following me around these boards

Maybe I feel sorry for you, treacle.

I'll ask again:-

do you pay the taxman more than you have to?

[pr1]

@pr1, you always seem very concerned with others taxation levels, rates etc. to the point of having a complex.

You don't come from a long line of family HMRC employees do you?

So, I have to ask, as the good citizen that you are, comrade, do you pay the taxman more than you have to?

you seem very concerned with me, you're like a lost puppy following me around these boards

if i did, would it change anything? this is a public forum afterall...