Hi,

I have been looking through old posts to this group relating to CS2
and working as a company director, some of which I found here:

http://groups.google.co.uk/groups?as_q=cs2+limited+company&num=10&scoring=r&hl=en&as_epq=&as_oq=&as_eq=&as_ugroup=uk.gov.agency.csa&as_usubject=&as_uauthors=&lr=&as_drrb=q&as_qdr=&as_mind=1&as_minm=1&as_miny=1981&as_maxd=20&as_maxm=5&as_maxy=2007&safe=active

What I would like to know is whether these threads present information
that is still correct? Can a director still receive a salary just
large enough to require NICs and draw the remainder as dividends
without the dividend payments being treated as income? Also a figure,
or threshold, of £65k was mentioned before the dividend payments would
be classed as income (?); Is this correct?

The company I am about to register will have 2 directors (myself + 1
other) with each director likely holding 50% of the shares (although
if it makes any difference I will take only a 49% stake) and the
opening balance on the books will probably be around £25k.

Thanks.

PS. For those who like casting moral judgments on CSA avoidance
questions :) my purpose here is not to avoid financial responsibility.
The PWC is (AFAIK) on income support so I would rather pay as little
as possible to the CSA and then save an equal or greater amount
elsewhere for the child.

Doubt if anyone will rake through old threads to fully answer, I would 
suggest you ask very specific questions of this group.

I understand your forming a limited company and working as an employee

This is no protection at all from CSA and is little different from working 
for any other company if fact its worse as if you decided not to comply they 
simply hit you with a DEO and as a company you must comply, further if they 
want to they can demand your accountant tells them everything about you and 
he must comply or he's breaking the law.

A much safer and controllable method is as a sole trader but then you don't 
have the protection of a Limited company but you have full control of 
everything, provided you do the accounts yourself and don't use an 
accountant and CSA must always deal exclusively with you and they can't hit 
you with a DEO.

I essence they'll want their percentage, and they deal will thousands of 
LTD's so they know every way you can carve it up.

If you really want to know how to totally shaft them get your wife to set up 
the company, can be Ltd (if you get in a third party as secretary as it cant 
be you), she runs it, she's the director, she gets all the wages and that 
coud be 5k or 10k or whatever a month, it's hers and you become house 
husband, you have nothing officially to do with her company your not a 
director or even an employee, you don't ever get paid a penny from the 
business but of course you can 'help out' 18 hours a day if you like but 
just always remember that you wife gives you house keeping money only and 
never payment for work. Basically she's the bread winner, the owner and she 
pays the tax on her wages. That way you get nil assessed and have a zero 
liability and they have no rights to ask anything at all about your wife. 
This works and is practiced by some and it's 100% legal.

Also means your Ex has to come to a private agreement with you or she gets 
absolutely nothing.

If your Ex is on benefits she would only get a tanner anyway but this way, 
you can give the kids as much as you like, give it directly to the kids and 
not to her and she doesn't even have to declare it.

and the beautiful thing is you can tell CSA to go and play with themselves 
and their is nothing they or your Ex can do about it.

Just always remember all money is paid to your wife, you only get house 
keeping from her


"John"  wrote in message 
news:5jd0535bovqnsc89r85pgr2mr4t143br94@4ax.com...
> Hi,
>
> I have been looking through old posts to this group relating to CS2
> and working as a company director, some of which I found here:
>
> http://groups.google.co.uk/groups?as_q=cs2+limited+company&num=10&scoring=r&hl=en&as_epq=&as_oq=&as_eq=&as_ugroup=uk.gov.agency.csa&as_usubject=&as_uauthors=&lr=&as_drrb=q&as_qdr=&as_mind=1&as_minm=1&as_miny=1981&as_maxd=20&as_maxm=5&as_maxy=2007&safe=active
>
> What I would like to know is whether these threads present information
> that is still correct? Can a director still receive a salary just
> large enough to require NICs and draw the remainder as dividends
> without the dividend payments being treated as income? Also a figure,
> or threshold, of £65k was mentioned before the dividend payments would
> be classed as income (?); Is this correct?
>
> The company I am about to register will have 2 directors (myself + 1
> other) with each director likely holding 50% of the shares (although
> if it makes any difference I will take only a 49% stake) and the
> opening balance on the books will probably be around £25k.
>
> Thanks.
>
> PS. For those who like casting moral judgments on CSA avoidance
> questions :) my purpose here is not to avoid financial responsibility.
> The PWC is (AFAIK) on income support so I would rather pay as little
> as possible to the CSA and then save an equal or greater amount
> elsewhere for the child.

Fletcher is right; that is the very best and most effective way to 
minimise payments.

If it is you and someone else who is not your partner, then there is one 
other tweek to do with declaring but not paying salary to yourself. 
This has Corporation Tax implications, but *should* avoid CSA 
liabilities until actually paid.

Marag



Fletcher wrote:
> Doubt if anyone will rake through old threads to fully answer, I would 
> suggest you ask very specific questions of this group.
> 
> I understand your forming a limited company and working as an employee
> 
> This is no protection at all from CSA and is little different from working 
> for any other company if fact its worse as if you decided not to comply they 
> simply hit you with a DEO and as a company you must comply, further if they 
> want to they can demand your accountant tells them everything about you and 
> he must comply or he's breaking the law.
> 
> A much safer and controllable method is as a sole trader but then you don't 
> have the protection of a Limited company but you have full control of 
> everything, provided you do the accounts yourself and don't use an 
> accountant and CSA must always deal exclusively with you and they can't hit 
> you with a DEO.
> 
> I essence they'll want their percentage, and they deal will thousands of 
> LTD's so they know every way you can carve it up.
> 
> If you really want to know how to totally shaft them get your wife to set up 
> the company, can be Ltd (if you get in a third party as secretary as it cant 
> be you), she runs it, she's the director, she gets all the wages and that 
> coud be 5k or 10k or whatever a month, it's hers and you become house 
> husband, you have nothing officially to do with her company your not a 
> director or even an employee, you don't ever get paid a penny from the 
> business but of course you can 'help out' 18 hours a day if you like but 
> just always remember that you wife gives you house keeping money only and 
> never payment for work. Basically she's the bread winner, the owner and she 
> pays the tax on her wages. That way you get nil assessed and have a zero 
> liability and they have no rights to ask anything at all about your wife. 
> This works and is practiced by some and it's 100% legal.
> 
> Also means your Ex has to come to a private agreement with you or she gets 
> absolutely nothing.
> 
> If your Ex is on benefits she would only get a tanner anyway but this way, 
> you can give the kids as much as you like, give it directly to the kids and 
> not to her and she doesn't even have to declare it.
> 
> and the beautiful thing is you can tell CSA to go and play with themselves 
> and their is nothing they or your Ex can do about it.
> 
> Just always remember all money is paid to your wife, you only get house 
> keeping from her
> 
> 
> "John"  wrote in message 
> news:5jd0535bovqnsc89r85pgr2mr4t143br94@4ax.com...
>> Hi,
>>
>> I have been looking through old posts to this group relating to CS2
>> and working as a company director, some of which I found here:
>>
>> http://groups.google.co.uk/groups?as_q=cs2+limited+company&num=10&scoring=r&hl=en&as_epq=&as_oq=&as_eq=&as_ugroup=uk.gov.agency.csa&as_usubject=&as_uauthors=&lr=&as_drrb=q&as_qdr=&as_mind=1&as_minm=1&as_miny=1981&as_maxd=20&as_maxm=5&as_maxy=2007&safe=active
>>
>> What I would like to know is whether these threads present information
>> that is still correct? Can a director still receive a salary just
>> large enough to require NICs and draw the remainder as dividends
>> without the dividend payments being treated as income? Also a figure,
>> or threshold, of £65k was mentioned before the dividend payments would
>> be classed as income (?); Is this correct?
>>
>> The company I am about to register will have 2 directors (myself + 1
>> other) with each director likely holding 50% of the shares (although
>> if it makes any difference I will take only a 49% stake) and the
>> opening balance on the books will probably be around £25k.
>>
>> Thanks.
>>
>> PS. For those who like casting moral judgments on CSA avoidance
>> questions :) my purpose here is not to avoid financial responsibility.
>> The PWC is (AFAIK) on income support so I would rather pay as little
>> as possible to the CSA and then save an equal or greater amount
>> elsewhere for the child. 
> 
>

Hi Fletcher

Does this also work for self employed only (not limited company) ie.
if my wife is self employed?

cheers
John








On 20 May, 17:17, "Fletcher"  wrote:
> Doubt if anyone will rake through old threads to fully answer, I would
> suggest you ask very specific questions of this group.
>
> I understand your forming a limited company and working as an employee
>
> This is no protection at all from CSA and is little different from working
> for any other company if fact its worse as if you decided not to comply they
> simply hit you with a DEO and as a company you must comply, further if they
> want to they can demand your accountant tells them everything about you and
> he must comply or he's breaking the law.
>
> A much safer and controllable method is as a sole trader but then you don't
> have the protection of a Limited company but you have full control of
> everything, provided you do the accounts yourself and don't use an
> accountant and CSA must always deal exclusively with you and they can't hit
> you with a DEO.
>
> I essence they'll want their percentage, and they deal will thousands of
> LTD's so they know every way you can carve it up.
>
> If you really want to know how to totally shaft them get your wife to set up
> the company, can be Ltd (if you get in a third party as secretary as it cant
> be you), she runs it, she's the director, she gets all the wages and that
> coud be 5k or 10k or whatever a month, it's hers and you become house
> husband, you have nothing officially to do with her company your not a
> director or even an employee, you don't ever get paid a penny from the
> business but of course you can 'help out' 18 hours a day if you like but
> just always remember that you wife gives you house keeping money only and
> never payment for work. Basically she's the bread winner, the owner and she
> pays the tax on her wages. That way you get nil assessed and have a zero
> liability and they have no rights to ask anything at all about your wife.
> This works and is practiced by some and it's 100% legal.
>
> Also means your Ex has to come to a private agreement with you or she gets
> absolutely nothing.
>
> If your Ex is on benefits she would only get a tanner anyway but this way,
> you can give the kids as much as you like, give it directly to the kids and
> not to her and she doesn't even have to declare it.
>
> and the beautiful thing is you can tell CSA to go and play with themselves
> and their is nothing they or your Ex can do about it.
>
> Just always remember all money is paid to your wife, you only get house
> keeping from her
>
> "John"  wrote in message
>
> news:5jd0535bovqnsc89r85pgr2mr4t143br94@4ax.com...
>
> > Hi,
>
> > I have been looking through old posts to this group relating to CS2
> > and working as a company director, some of which I found here:
>
> >http://groups.google.co.uk/groups?as_q=cs2阩ꊵ犉ꥪ&num=10&sco...
>
> > What I would like to know is whether these threads present information
> > that is still correct? Can a director still receive a salary just
> > large enough to require NICs and draw the remainder as dividends
> > without the dividend payments being treated as income? Also a figure,
> > or threshold, of £65k was mentioned before the dividend payments would
> > be classed as income (?); Is this correct?
>
> > The company I am about to register will have 2 directors (myself  1
> > other) with each director likely holding 50% of the shares (although
> > if it makes any difference I will take only a 49% stake) and the
> > opening balance on the books will probably be around £25k.
>
> > Thanks.
>
> > PS. For those who like casting moral judgments on CSA avoidance
> > questions :) my purpose here is not to avoid financial responsibility.
> > The PWC is (AFAIK) on income support so I would rather pay as little
> > as possible to the CSA and then save an equal or greater amount
> > elsewhere for the child.

On Sun, 20 May 2007 17:17:42 +0100, "Fletcher"
 wrote:

>
>Doubt if anyone will rake through old threads to fully answer, I would 
>suggest you ask very specific questions of this group.
>
>I understand your forming a limited company and working as an employee
>
>This is no protection at all from CSA and is little different from working 
>for any other company if fact its worse as if you decided not to comply they 
>simply hit you with a DEO and as a company you must comply, further if they 
>want to they can demand your accountant tells them everything about you and 
>he must comply or he's breaking the law.

From FNF, "There should be no need for the CSA to see the Limited
Company's accounts. Their only duty is to assess your income; they are
likely to ask your accountant for confirmation of income for proof. If
you pay yourself a wage the CSA will get the details via the
Contributions Agency."

I understand what you are saying Fletcher, so I shall be a little more
specific as you suggest, the information provided below is what the
CSA or anyone else for that matter would be able to access via
Companies House):

There is to be a limited company formed as follows:

- There will be 2 directors (me + 1 other, family member not partner)
and a company secretary (accountant). The second director will not be
drawing a salary)
- Initial investment capital of £25K (This may be in the form of a
directors loan to the company and is not included in the figures
below)
- Initial capital assets of approx £10k
- I will be working as a contractor (for the most part outside of
IR35, although some contracts will likely place me squarely within
IR35)

Based on a relatively slow first year (all outside of IR35 during this
period) financial estimates on ready-to-go contracts are as follows:

- My salary £6,000
- Legitimate section 98 expenses £3,000
- Pension contributions £2,000
- Other income £0
- Dividend percentage at 50% (or possibly 49%)

Company Income
- Contract revenue £41,250
-  Other income £0
-  Total revenue £41,250

Company Expenditure
- Expenses £3,000
- Employers N.I. on salary £102
- Salary £6,000
- Pension contributions £2,000
- Total expenditure £11,102
- Company profit £30,147
- Corporation tax £6,029
- Distributed profits £24,118

Tax Calculations
- Taxable Income (salary + net dividend) £18,059
- Employees NI £88
- PAYE £77
- Additional tax on dividends (1st share) £0
- Additional tax on dividends (2nd share) £0

Personal Income
- Net Annual Income £29,952  (salary + dividends)
- Net Monthly Income £2,496 (averaged from salary + dividends)

For purposes of maintenance on CS2 my income is £6k, as dividends are
exempt I believe. (?) Also, on the dividends there is no additional
tax, so even if they weren't exempt, they would not be classed as
taxable income???

Therefore based on the above my CSA payments should be nil rate or
£5p/w. Would that be correct?

Furthermore, are section 98 expenses treated as assessable income by
the CSA?

The reason that I suggested I would only take a 49% stake was because
I have read the 'intentional diversion of funds' argument, so I
thought that as the smallest shareholder this argument may not hold.
Additionally, as I would not be the sole director the surely some
protracted arguments that have been put forward by the CSA, such as a
single-person limited company being treated as self-employed and
assessed as if he/she and the company were one and the same in law (as
I believe has been the case with the CSA and definitely in general
law) would not hold weight?

Any thoughts?

Thanks.


>A much safer and controllable method is as a sole trader but then you don't 
>have the protection of a Limited company but you have full control of 
>everything, provided you do the accounts yourself and don't use an 
>accountant and CSA must always deal exclusively with you and they can't hit 
>you with a DEO.

Unfortunately operating as a sole trader is not appropriate in this
instance, for a number of reasons.

<remainder snipped>

On Sun, 20 May 2007 17:21:08 +0100, Marag Dubh  wrote:

>Fletcher is right; that is the very best and most effective way to 
>minimise payments.
>
>If it is you and someone else who is not your partner, then there is one 
>other tweek to do with declaring but not paying salary to yourself. 
>This has Corporation Tax implications, but *should* avoid CSA 
>liabilities until actually paid.

Can you tell me a little more about this please? (Or perhaps provide
me with a URI?)

Thanks.

>Marag

<snipped remainder of quoted post>

Yes, either or basically you just switch roles, she becomes the official 
legal bread winner and your the house husband but you "help" out in her 
business but don't get paid for it, it's a labour of love, she gets paid 
handsomely even if she doesn't do a stroke. So long as the tax is properly 
paid by her she's entitled to do as she pleases with her cash and she give a 
chunk of it to you as "housekeeping money"

It only works for married couples, if your not married to her your on a 
stick wicket. Doesn't work out for everyone, depends on circumstances but 
when it does it's pure magic and a nice kick in the nuts for the Gestapo

 wrote in message 
news:1179740588.810069.320550@n15g2000prd.googlegroups.com...
Hi Fletcher

Does this also work for self employed only (not limited company) ie.
if my wife is self employed?

cheers
John








On 20 May, 17:17, "Fletcher"  wrote:
> Doubt if anyone will rake through old threads to fully answer, I would
> suggest you ask very specific questions of this group.
>
> I understand your forming a limited company and working as an employee
>
> This is no protection at all from CSA and is little different from working
> for any other company if fact its worse as if you decided not to comply 
> they
> simply hit you with a DEO and as a company you must comply, further if 
> they
> want to they can demand your accountant tells them everything about you 
> and
> he must comply or he's breaking the law.
>
> A much safer and controllable method is as a sole trader but then you 
> don't
> have the protection of a Limited company but you have full control of
> everything, provided you do the accounts yourself and don't use an
> accountant and CSA must always deal exclusively with you and they can't 
> hit
> you with a DEO.
>
> I essence they'll want their percentage, and they deal will thousands of
> LTD's so they know every way you can carve it up.
>
> If you really want to know how to totally shaft them get your wife to set 
> up
> the company, can be Ltd (if you get in a third party as secretary as it 
> cant
> be you), she runs it, she's the director, she gets all the wages and that
> coud be 5k or 10k or whatever a month, it's hers and you become house
> husband, you have nothing officially to do with her company your not a
> director or even an employee, you don't ever get paid a penny from the
> business but of course you can 'help out' 18 hours a day if you like but
> just always remember that you wife gives you house keeping money only and
> never payment for work. Basically she's the bread winner, the owner and 
> she
> pays the tax on her wages. That way you get nil assessed and have a zero
> liability and they have no rights to ask anything at all about your wife.
> This works and is practiced by some and it's 100% legal.
>
> Also means your Ex has to come to a private agreement with you or she gets
> absolutely nothing.
>
> If your Ex is on benefits she would only get a tanner anyway but this way,
> you can give the kids as much as you like, give it directly to the kids 
> and
> not to her and she doesn't even have to declare it.
>
> and the beautiful thing is you can tell CSA to go and play with themselves
> and their is nothing they or your Ex can do about it.
>
> Just always remember all money is paid to your wife, you only get house
> keeping from her
>
> "John"  wrote in message
>
> news:5jd0535bovqnsc89r85pgr2mr4t143br94@4ax.com...
>
> > Hi,
>
> > I have been looking through old posts to this group relating to CS2
> > and working as a company director, some of which I found here:
>
> >http://groups.google.co.uk/groups?as_q=cs2+limited+company&num=10&sco...
>
> > What I would like to know is whether these threads present information
> > that is still correct? Can a director still receive a salary just
> > large enough to require NICs and draw the remainder as dividends
> > without the dividend payments being treated as income? Also a figure,
> > or threshold, of £65k was mentioned before the dividend payments would
> > be classed as income (?); Is this correct?
>
> > The company I am about to register will have 2 directors (myself + 1
> > other) with each director likely holding 50% of the shares (although
> > if it makes any difference I will take only a 49% stake) and the
> > opening balance on the books will probably be around £25k.
>
> > Thanks.
>
> > PS. For those who like casting moral judgments on CSA avoidance
> > questions :) my purpose here is not to avoid financial responsibility.
> > The PWC is (AFAIK) on income support so I would rather pay as little
> > as possible to the CSA and then save an equal or greater amount
> > elsewhere for the child.

Like I said, setting up as a limited company is not a great option and I'd 
avoid it as I explained.

If you have to because you need the Ltd. Cover or because the others want it 
that way, why not let your partner be the Ltd. paid director and you be 
purely an emloyee on minimum wage? That stops CSA from demanding the 
accountant spill his guts about how the compay is funded but yeh you got to 
trust your partner bigtime as she effectivle owns your business.

Another option would be as above but you also going self employed and 
working for the ltd on a self employed basis, you might pay more tax that 
way, don't know but CSA can be minamised or even almost ignored for a year 
or two anyway as you declare a trading loss.

"John"  wrote in message 
news:met253lmc6ecdme75m700qom2m7sp9lb5v@4ax.com...
> On Sun, 20 May 2007 17:17:42 +0100, "Fletcher"
>  wrote:
>
>>
>>Doubt if anyone will rake through old threads to fully answer, I would
>>suggest you ask very specific questions of this group.
>>
>>I understand your forming a limited company and working as an employee
>>
>>This is no protection at all from CSA and is little different from working
>>for any other company if fact its worse as if you decided not to comply 
>>they
>>simply hit you with a DEO and as a company you must comply, further if 
>>they
>>want to they can demand your accountant tells them everything about you 
>>and
>>he must comply or he's breaking the law.
>
> From FNF, "There should be no need for the CSA to see the Limited
> Company's accounts. Their only duty is to assess your income; they are
> likely to ask your accountant for confirmation of income for proof. If
> you pay yourself a wage the CSA will get the details via the
> Contributions Agency."
>
> I understand what you are saying Fletcher, so I shall be a little more
> specific as you suggest, the information provided below is what the
> CSA or anyone else for that matter would be able to access via
> Companies House):
>
> There is to be a limited company formed as follows:
>
> - There will be 2 directors (me + 1 other, family member not partner)
> and a company secretary (accountant). The second director will not be
> drawing a salary)
> - Initial investment capital of £25K (This may be in the form of a
> directors loan to the company and is not included in the figures
> below)
> - Initial capital assets of approx £10k
> - I will be working as a contractor (for the most part outside of
> IR35, although some contracts will likely place me squarely within
> IR35)
>
> Based on a relatively slow first year (all outside of IR35 during this
> period) financial estimates on ready-to-go contracts are as follows:
>
> - My salary £6,000
> - Legitimate section 98 expenses £3,000
> - Pension contributions £2,000
> - Other income £0
> - Dividend percentage at 50% (or possibly 49%)
>
> Company Income
> - Contract revenue £41,250
> -  Other income £0
> -  Total revenue £41,250
>
> Company Expenditure
> - Expenses £3,000
> - Employers N.I. on salary £102
> - Salary £6,000
> - Pension contributions £2,000
> - Total expenditure £11,102
> - Company profit £30,147
> - Corporation tax £6,029
> - Distributed profits £24,118
>
> Tax Calculations
> - Taxable Income (salary + net dividend) £18,059
> - Employees NI £88
> - PAYE £77
> - Additional tax on dividends (1st share) £0
> - Additional tax on dividends (2nd share) £0
>
> Personal Income
> - Net Annual Income £29,952  (salary + dividends)
> - Net Monthly Income £2,496 (averaged from salary + dividends)
>
> For purposes of maintenance on CS2 my income is £6k, as dividends are
> exempt I believe. (?) Also, on the dividends there is no additional
> tax, so even if they weren't exempt, they would not be classed as
> taxable income???
>
> Therefore based on the above my CSA payments should be nil rate or
> £5p/w. Would that be correct?
>
> Furthermore, are section 98 expenses treated as assessable income by
> the CSA?
>
> The reason that I suggested I would only take a 49% stake was because
> I have read the 'intentional diversion of funds' argument, so I
> thought that as the smallest shareholder this argument may not hold.
> Additionally, as I would not be the sole director the surely some
> protracted arguments that have been put forward by the CSA, such as a
> single-person limited company being treated as self-employed and
> assessed as if he/she and the company were one and the same in law (as
> I believe has been the case with the CSA and definitely in general
> law) would not hold weight?
>
> Any thoughts?
>
> Thanks.
>
>
>>A much safer and controllable method is as a sole trader but then you 
>>don't
>>have the protection of a Limited company but you have full control of
>>everything, provided you do the accounts yourself and don't use an
>>accountant and CSA must always deal exclusively with you and they can't 
>>hit
>>you with a DEO.
>
> Unfortunately operating as a sole trader is not appropriate in this
> instance, for a number of reasons.
>
> <remainder snipped>

On Mon, 21 May 2007 17:44:22 +0100, "Fletcher"
 wrote:

>Like I said, setting up as a limited company is not a great option and I'd 
>avoid it as I explained.

OK, thanks for the comments.

>If you have to because you need the Ltd. Cover or because the others want it 
>that way, why not let your partner be the Ltd. paid director and you be 
>purely an emloyee on minimum wage? That stops CSA from demanding the 
>accountant spill his guts about how the compay is funded but yeh you got to 
>trust your partner bigtime as she effectivle owns your business.

I need to be Ltd and VAT registered for professional reasons, as well
as financial. Self-employment will potentially and severely restrict
the contracts/work I can undertake.

There is a however caveat with your suggestion that a partner/spouse
be the paid director and the other partner be on the NMW (or perhaps
even non-payrolled) when offered as a 'solution for all' that should
be noted.

If someone working as a contractor operated under such an arrangement,
then they could (as I have just found out) get stung by the S660
'settlements rule, potentially landing them with a huge tax bill at
some point in the future. However to fall foul here the spouse/partner
would need to:

1) Own shares in the company
2) Perform no significant work for the company

In effect with S660, dividend income received by low-paid or
non-payrolled partners, spouses or friends will be taxed as income of
the principle Director, and retrospectively at that. However HMRC have
argued that the only real employee in such a business is the
non-payrolled or low paid individual doing the real work, so *all the
income* must be taxed under *his* name. I suspect this may have a
major impact on CSA payments too if caught out like this, possibly
with arrears being calculated over the last six years(?),  (six years
being the period that Customs and Revenue would use to calculate
back-tax on this new gross rate of the non/NMW earner, if the company
had been trading that long anyway).

So, as I understand it, operating along those lines *could* come at a
very high cost for some at some time in the future, that is of course,
dependant upon the exact structure of the company.

<snipped>

Another small point but interesting - if you were to fail to pay the Gestapo 
they have the power to any money you are due directly from who ever you have 
a contract with! They have done this in the past and its worth bearing in 
mind. If you undertake long-term contract work then you really must comply 
with the Gestapo's demands.

Yeh I agree, they system is and will continue to find ways to stop and deter 
people from doing anything else other than complying blindly with every 
command however in all of these situations the Gestapo and indeed the 
revenue are burdened with providing proof and depending on the business 
model could prove to be impossible.

As an example, we see all the time on the telly and radio adverts saying 
that dole cheaters will be 1) caught 2) punished

In reality the only way a dole cheat can be caught is either by admitting 
the crime or their paymaster admitting the crime or by being "caught" red 
handed, in the act of not working but being paid for working as the Burdon 
of proof is on the agency and if they stick to their story that no money 
changes hands then they never get caught. The benefits agency filmed a 
building site worker working six days a week then they tried to prosecute 
him and his paymaster and failed totally! The only way they ever get 
"caught" is if they confess.

They make me laugh, my ex was one of these experts and I was totaly bemused 
that although the frud teams knew exactly what she was doing they could do 
nothing - laughable! an utter joke.



"John"  wrote in message 
news:m64653tedne2vbdq7q8p3m3e9gueopid87@4ax.com...
> On Mon, 21 May 2007 17:44:22 +0100, "Fletcher"
>  wrote:
>
>>Like I said, setting up as a limited company is not a great option and I'd
>>avoid it as I explained.
>
> OK, thanks for the comments.
>
>>If you have to because you need the Ltd. Cover or because the others want 
>>it
>>that way, why not let your partner be the Ltd. paid director and you be
>>purely an emloyee on minimum wage? That stops CSA from demanding the
>>accountant spill his guts about how the compay is funded but yeh you got 
>>to
>>trust your partner bigtime as she effectivle owns your business.
>
> I need to be Ltd and VAT registered for professional reasons, as well
> as financial. Self-employment will potentially and severely restrict
> the contracts/work I can undertake.
>
> There is a however caveat with your suggestion that a partner/spouse
> be the paid director and the other partner be on the NMW (or perhaps
> even non-payrolled) when offered as a 'solution for all' that should
> be noted.
>
> If someone working as a contractor operated under such an arrangement,
> then they could (as I have just found out) get stung by the S660
> 'settlements rule, potentially landing them with a huge tax bill at
> some point in the future. However to fall foul here the spouse/partner
> would need to:
>
> 1) Own shares in the company
> 2) Perform no significant work for the company
>
> In effect with S660, dividend income received by low-paid or
> non-payrolled partners, spouses or friends will be taxed as income of
> the principle Director, and retrospectively at that. However HMRC have
> argued that the only real employee in such a business is the
> non-payrolled or low paid individual doing the real work, so *all the
> income* must be taxed under *his* name. I suspect this may have a
> major impact on CSA payments too if caught out like this, possibly
> with arrears being calculated over the last six years(?),  (six years
> being the period that Customs and Revenue would use to calculate
> back-tax on this new gross rate of the non/NMW earner, if the company
> had been trading that long anyway).
>
> So, as I understand it, operating along those lines *could* come at a
> very high cost for some at some time in the future, that is of course,
> dependant upon the exact structure of the company.
>
> <snipped>

John wrote:
> On Sun, 20 May 2007 17:21:08 +0100, Marag Dubh  wrote:
> 
>> Fletcher is right; that is the very best and most effective way to 
>> minimise payments.
>>
>> If it is you and someone else who is not your partner, then there is one 
>> other tweek to do with declaring but not paying salary to yourself. 
>> This has Corporation Tax implications, but *should* avoid CSA 
>> liabilities until actually paid.
> 
> Can you tell me a little more about this please? (Or perhaps provide
> me with a URI?)
> 
> Thanks.
> 
>> Marag
> 
> <snipped remainder of quoted post>

Salaries/bonuses can be awarded but not paid.  As such they are not tax 
deductible for CT purposes if not taxed (i.e. put through PAYE) within 
nine months of the year end. In that case they become tax deductible 
until actually put through PAYE *BUT* the recipient has an obligation 
from the company to pay them that amount of money at some point in the 
future, effectively a directors' loan that has yet to be taxed.

Therefore, the director does not see the bonus appear on their P60 (and 
consequently is not reportable for CSA or WFTC purposes) but the company 
has a debt.  This can allow a director to minimise CSA income, but allow 
a balance between the rewards to different directors/shareholders.

If this director/shareholder is a minority shareholder, then the 
agreement could be that the bonus is only payable when the majority 
shareholder approves (or the minority shareholders disposes of there 
shares etc.) and consequently the departure rules *should* not apply.

I say *should* as I have see both successful and unsuccessful claims 
relating to the above.

Just another stupid set of rules, no-one ever thought through.

BTW, you are right to be concerned about s660.  How about having a 
signed stock transfer form to allow you to acquire more shares at a 
nominal sum whenever the CSA bugger off?  Legal, simple and 
unchallengeable, if you write up the minutes correctly.

Marag

On Tue, 22 May 2007 20:04:11 +0100, Marag Dubh  wrote:

>John wrote:
>> On Sun, 20 May 2007 17:21:08 +0100, Marag Dubh  wrote:
>> 
>>> Fletcher is right; that is the very best and most effective way to 
>>> minimise payments.

<snipped>

>Salaries/bonuses can be awarded but not paid.  As such they are not tax 
>deductible for CT purposes if not taxed (i.e. put through PAYE) within 
>nine months of the year end. In that case they become tax deductible 
>until actually put through PAYE *BUT* the recipient has an obligation 
>from the company to pay them that amount of money at some point in the 
>future, effectively a directors' loan that has yet to be taxed.
>
>Therefore, the director does not see the bonus appear on their P60 (and 
>consequently is not reportable for CSA or WFTC purposes) but the company 
>has a debt.  This can allow a director to minimise CSA income, but allow 
>a balance between the rewards to different directors/shareholders.
>
>If this director/shareholder is a minority shareholder, then the 
>agreement could be that the bonus is only payable when the majority 
>shareholder approves (or the minority shareholders disposes of there 
>shares etc.) and consequently the departure rules *should* not apply.
>
>I say *should* as I have see both successful and unsuccessful claims 
>relating to the above.
>
>Just another stupid set of rules, no-one ever thought through.
>
>BTW, you are right to be concerned about s660.  How about having a 
>signed stock transfer form to allow you to acquire more shares at a 
>nominal sum whenever the CSA bugger off?  Legal, simple and 
>unchallengeable, if you write up the minutes correctly.
>
>Marag

Thanks for the information, it is appreciated and will be useful when
I get around to finding a good local accountant.

On Tue, 22 May 2007 19:50:44 +0100, "Fletcher"
 wrote:

>Another small point but interesting - if you were to fail to pay the Gestapo 
>they have the power to any money you are due directly from who ever you have 
>a contract with! They have done this in the past and its worth bearing in 
>mind. If you undertake long-term contract work then you really must comply 
>with the Gestapo's demands.
>
>Yeh I agree, they system is and will continue to find ways to stop and deter 
>people from doing anything else other than complying blindly with every 
>command however in all of these situations the Gestapo and indeed the 
>revenue are burdened with providing proof and depending on the business 
>model could prove to be impossible.

Thanks for the comments, opinions and info. It's appreciated.

I still have a lot of head-scratching to do (not nits though) so I may
be back with more questions later, although I have asked another one
on a new thread if you have any comments to offer :)

Cheers.

<snipped>