Sounds like backdating

[NCo]

Hi,

My current accountant is currently in the process of gifting shares to my wife and making her a director, as per my request. My company was formed in July and they never suggested this approach, but when I raised it as a potential issue (loss of revenue do to tax inefficiency), they said that they can issue her payroll going back to July and splitting past dividend accordingly.

I am not knowledgable in UK tax laws but that sounded to me risky, to say the least.

I am in the process of looking for a new accountant as the current firm provides an underwhelming service, and have been speaking to a couple of really great people. When the split came up one of them felt really uneasy about this, said that you can't backdate the date of appointment and pay salary retrospectively (which makes sense).

Has anyone been in a similar situation?

[GhostofTarbera]

I have never married your wife or know your accountant

So no


What’s your actual issue or question ?


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[northernladuk]

You can pay yourself a wage and dividends at any time you want. You run the company. Pay yourself once a month, once a year. Doesn't matter as long a as RTI and dividend paperwork is completed you are good to go.

[NCo]

You can pay yourself a wage and dividends at any time you want. You run the company. Pay yourself once a month, once a year. Doesn't matter as long a as RTI and dividend paperwork is completed you are good to go.

I'll clarify.

My wife gets added next week as a shareholder and employee. One accountant suggest backdating her salary from July and making a backdated dividend split. The other says this is impossible.

I tend to agree with the second, but was wondering if anyone had ever heard anything similar.

[DeludedKitten]

I'll clarify.

My wife gets added next week as a shareholder and employee. One accountant suggest backdating her salary from July and making a backdated dividend split. The other says this is impossible.

I tend to agree with the second, but was wondering if anyone had ever heard anything similar.

Her salary doesn't need to be back dated at all, so there is no need to think about that. Instead of paying her a salary that is split over 12 months, split it over 6 or whatever. There is no benefit in back-dating the employment, so let's ignore that part.

There is no legal requirement to notify Companies House of any share transfer until your next confirmation statement, so there is no way for CoHo to know when the shares were given.

Is the first accountant suggesting to change the initial share allocation (ie back date it as if it was done on incorporation), or changing it with a date that is later than incorporation but prior to the dividend being paid?

Personally, I wouldn't run the risk of back dating it, even if it is allowed in some eyes. Given that the company was only formed in July, there can't have been that much retained profit in the company to be able to pay a dividend, so it's all a bit of a moot point in my eyes. By all means do the share transfer and set her up on payroll (think about what you are paying her for, though) from now on, but I wouldn't bother with messing about with back dating things for something that can't really have a significant benefit.

[NotAllThere]

What matters is what the books show. Technically, once a transaction has been recorded, it should stay (possibly with a reversal) so there's a clear audit trail. But unless you're using blockchain, you can always rewrite your accounts before they get submitted. Doing it after they're submitted is not allowed of course, although bone fide corrections can be done.

[GhostofTarbera]

I'll clarify.

My wife gets added next week as a shareholder and employee. One accountant suggest backdating her salary from July and making a backdated dividend split. The other says this is impossible.

I tend to agree with the second, but was wondering if anyone had ever heard anything similar.

What’s your wife job in your company ?

Sounds like tax aversion to me, as she really does nothing ????


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[NCo]

Her salary doesn't need to be back dated at all, so there is no need to think about that. Instead of paying her a salary that is split over 12 months, split it over 6 or whatever. There is no benefit in back-dating the employment, so let's ignore that part.

There is no legal requirement to notify Companies House of any share transfer until your next confirmation statement, so there is no way for CoHo to know when the shares were given.

Is the first accountant suggesting to change the initial share allocation (ie back date it as if it was done on incorporation), or changing it with a date that is later than incorporation but prior to the dividend being paid?

Personally, I wouldn't run the risk of back dating it, even if it is allowed in some eyes. Given that the company was only formed in July, there can't have been that much retained profit in the company to be able to pay a dividend, so it's all a bit of a moot point in my eyes. By all means do the share transfer and set her up on payroll (think about what you are paying her for, though) from now on, but I wouldn't bother with messing about with back dating things for something that can't really have a significant benefit.

Thanks for the detailed reply.

I assume they are changing to a date later than the formation but prior to the first dividend which was issued in August.

There is quite a bit of retained profit, and adjusting the past dividends will be a substantial tax saving, but as you said - I wouldn't risk it.

[NCo]

What’s your wife job in your company ?

Sounds like tax aversion to me, as she really does nothing ????


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Your second aggressive and rude response, dont you have other things to do?

[GhostofTarbera]

Sounds like backdating

Your second aggressive and rude response, dont you have other things to do?

Just trying to keep you out of jail

3rd post


Do tell us what your wife role in the company is ?

Bookkeeper ??

Lol

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