Something to worry about? Thought some here might be interested...
Contractors who work through their own limited company may face a backlash over any dividend payments they make to themselves, an expert has said.
Paul Spindler, technology partner at chartered accountants Kingston Smith, warned that contractors should consider the repercussions of having a low salary and high bonus payments should HM Revenue and Customs (HMRC) decide to investigate.
Speaking to industry site Contractor UK, he cited a recent case in which a contractor working through a limited company argued that dividend payments were part of a bonuses scheme and therefore could not be subject to PAYE or National Insurance.
HMRC disagreed with the contractor, adding: "The employees received their dividends not by reason of holding shares but because of their employment with the company."
The tax tribunal added that it is possible for dividend payments to be classified as both a bonus and as income.
Contractors have been subject to a number of recent financial changes, with the Financial Services Authority proposing to bring an end to self-certified mortgages.
http://www.excelliumumbrella.com/new...hp?id=19422889
Contractors who work through their own limited company may face a backlash over any dividend payments they make to themselves, an expert has said.
Paul Spindler, technology partner at chartered accountants Kingston Smith, warned that contractors should consider the repercussions of having a low salary and high bonus payments should HM Revenue and Customs (HMRC) decide to investigate.
Speaking to industry site Contractor UK, he cited a recent case in which a contractor working through a limited company argued that dividend payments were part of a bonuses scheme and therefore could not be subject to PAYE or National Insurance.
HMRC disagreed with the contractor, adding: "The employees received their dividends not by reason of holding shares but because of their employment with the company."
The tax tribunal added that it is possible for dividend payments to be classified as both a bonus and as income.
Contractors have been subject to a number of recent financial changes, with the Financial Services Authority proposing to bring an end to self-certified mortgages.
http://www.excelliumumbrella.com/new...hp?id=19422889
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