Reply to: New Accountant - advises against income splitting

[MrButton]

New Accountant - advises against income splitting

OP. Are you claiming any other expenses?

If not is it not better to just go brolly?

[madame SasGuru]

My only comment would be if you think paying my wife £800 a month is a lot, it’s a lot cheaper than the £24k a year her replacement is about to cost me.

[WordIsBond]

Still, I don't think there's a right/wrong answer to this. Each accountant will at some point have to decide where they sit along the cautious/aggressive spectrum on a variety of matters. I don't agree that an accountant should be criticised for recommending against something that lots of other people do and "get away with it".

I agree. I'm not one of the people saying OP should get a new accountant. Maybe he should and maybe he shouldn't. It depends on how this advice was given.

If my accountant is cautious I want to hear his reasons. If he's out of line with what most people are doing I want him to admit it, and tell me why. I want him to make it clear what the law says and what the pitfalls are. But I certainly wouldn't dump him for giving cautious advice. I do want him to let me call the shots when something is not entirely clear, but I'll usually go with his advice even if I think it is overly cautious.

I'd be more concerned about the advice not to get a new mobile. Unless there's something OP isn't telling us about that, that one seems pretty straightforward. I'd really be pressing an accountant who gave me that advice.

[Maslins]

Maybe I missed the point but you didn't answer my question. Have you ever heard of HMRC challenging it? Or is this just one of those ghost stories accountants tell each other around the campfire when they get together?

Perhaps. I'm in the camp that it would take a particularly aggressive, and brave tax inspector to attempt to challenge an £8k salary paid to a spouse. The crux of their argument would need to be "we don't think your spouse is worth £8k/year".

Still, I don't think there's a right/wrong answer to this. Each accountant will at some point have to decide where they sit along the cautious/aggressive spectrum on a variety of matters. I don't agree that an accountant should be criticised for recommending against something that lots of other people do and "get away with it".

[WordIsBond]

It is clearly uncommon for HMRC to challenge it, but believe me, if you get a CT enquiry, they will ask for it to be justified.

Maybe I missed the point but you didn't answer my question. Have you ever heard of HMRC challenging it? Or is this just one of those ghost stories accountants tell each other around the campfire when they get together?

So you are assuming all children in the world are under 16? Nice one!

Heh. My son who happens to be somewhat over 16 is a director in my company. But it's pretty hard to see that as coming under the subject of this thread (income splitting) because anything that is paid to him I'll never see again....

[craigy1874]

Ever hear of HMRC challenging director's remuneration of £8K or even £11K?

They'd have to quantify the proper amount of compensation to compensate a director for the liability they incur by serving in that role. How can they prove it should be less than £11K?

If you pay a spouse director's compensation of £50K or £100K you might have an issue, but then IT, ERNI, and EENI come into play, so no one would do that and they wouldn't be likely to object.

No reason, really, other than that it is illegal.

You are missing the point! It is clearly uncommon for HMRC to challenge it, but believe me, if you get a CT enquiry, they will ask for it to be justified. There is a big difference between not having to justify it and HMRC hardly ever querying it!

So you are assuming all children in the world are under 16? Nice one!

[ladymuck]

No. Do it now.

+1

[northernladuk]

I will change accountants after next financial year.

No. Do it now.

[abu1]

Better walk to work if he's your accountant. It'll be for the best and won't bring suspicion upon you. Unless you claim for shoes of course.

I will change accountants after next financial year.

[LondonManc]

He said he does not want to bring any suspicion from hrmc on me and that I should just play it safe . I wanted to purchase new mobile phone he said don't will make things complicated

Better walk to work if he's your accountant. It'll be for the best and won't bring suspicion upon you. Unless you claim for shoes of course.

[northernladuk]

He said he does not want to bring any suspicion from hrmc on me and that I should just play it safe . I wanted to purchase new mobile phone he said don't will make things complicated

Christ you most certainly want to get rid of them. Phones are very well documented and quite acceptable.

[abu1]

Sounds like you need a new accountant.

He said he does not want to bring any suspicion from hrmc on me and that I should just play it safe . I wanted to purchase new mobile phone he said don't will make things complicated

[MrButton]

my accountant has also advised against it he also has advised against giving out dividends saying its risky and safer just to pay the tax on profits after the whole year. Told me apart from the salary leave all income in the account

Sounds like you need a new accountant.

[LondonManc]

dodgy of safe?

Crap.

[WordIsBond]

https://forbeswatson.co.uk/profit-ex...use-tax-abuse/

According to this article, instead of salary, you can pay your spouse directors’ fees. You will need to appoint your wife as a director. This MIGHT be the best option for you.

FTFY. In most cases it is a good option. It's what I've done.