No Company Income - still paying a salary

[ladymuck]

In what way? I'm a boomer in IT and so's my boss

I'm Brian, and so is my wife!

[Peoplesoft bloke]

Also being a boomer in IT doesn't help.

In what way? I'm a boomer in IT and so's my boss

[jamesbrown]

The comment from the accountant was what I was questioning.
I've gone back to him and asked him to go up his own chain to qualify what he is suggesting.
He suggested that I wasn't 'Trading' so for end of year accounts has suggested salary payment resulted in a loss (which is true), that loss couldn't be carried back to obtain CT relief, it can only be carried forward. (Is this true), but it depends if I was 'Trading'.
Is there a definitive description of 'Trading'

Yes on the face of it I should be paying myself Dividends only - but there are other factors in play.

Ah, this is what I mentioned above.

Honestly, though, if you're looking for work, you're trading and I wouldn't worry about it.

[ravenscroft]

The comment from the accountant was what I was questioning.
I've gone back to him and asked him to go up his own chain to qualify what he is suggesting.
He suggested that I wasn't 'Trading' so for end of year accounts has suggested salary payment resulted in a loss (which is true), that loss couldn't be carried back to obtain CT relief, it can only be carried forward. (Is this true), but it depends if I was 'Trading'.
Is there a definitive description of 'Trading'

Yes on the face of it I should be paying myself Dividends only - but there are other factors in play.

[ladymuck]

A PAYE salary is a business transaction that is independent of revenue. I too am struggling to understand why you're worrying about conducting something that is perfectly legit.

Granted, it helps to have cash in the bank to pay the salary but you don't need anything special like sufficient retained profit to pay it. Eve

[ladymuck]

Why are you paying yourself 20k and not using low salary + dividends?

May be cash rich but lacking retained profit?

[jamesbrown]

Probably not an issue unless you're trying to carry back a trading loss and your company is no longer trading. But if you're actively looking for work and not finding it, then you're trading, so no issues.

[northernladuk]

Why are you paying yourself 20k and not using low salary + dividends?

[malvolio]

Get a new accountant...

Agreed. In spades...

I did this for 20 months for various reasons. One of, if not the most important reasons for having a LtdCo is to spread your variable income over non earning periods.

[eek]

Get a new accountant...

[ravenscroft]

Where's that statement from?

Given that

1) you need to spend some time running the company
2) the company can afford to pay you
3) you are paying more via PAYE than you would be by paying dividends
I'm at a complete loss as to what you are worried about?

The quote came from my 'accountant'
Yes its one of the minnions that has that title - did it come from a professional in that organisation etc? - querying.
Seeing if anyone out there has come across this
Thanks

[eek]

This statement:
HMRC can argue that no income is generated for the company by the Director, why the salary is being run and taken. You should be able to explain to HMRC if ever they ask you the reason of salary

Seems vague

Where's that statement from?

Given that

1) you need to spend some time running the company
2) the company can afford to pay you
3) you are paying more via PAYE than you would be by paying dividends
I'm at a complete loss as to what you are worried about?

[ravenscroft]

I will ask what is your actual question?

You have the money to pay salary - what exactly are you worrying about?

This statement:
HMRC can argue that no income is generated for the company by the Director, why the salary is being run and taken. You should be able to explain to HMRC if ever they ask you the reason of salary

Seems vague

[eek]

I will ask what is your actual question?

You have the money to pay salary - what exactly are you worrying about?

[ravenscroft]

Around 18 months with no company income - but I have been paying myself a salary - 20K Year.
Company is active and yes its a combination of Covid and a serious health issue making securing work tricky.
Also being a boomer in IT doesn't help.
Will HMRC take a dim view - seems very grey - cause I intend/would like to continue paying a salary and intend to seek work in the next few months - but could take longer - who knows.
Are there rules for this. Maybe a declaration to Hector - or not good idea to wake him up.
I have a large sum in Company Bank account - all taxes paid up to date.
Please no - what does your accountant say answers