The job retention scheme is for those on the payroll to receive 80% of their wages.
I see people are complaining on aweb that it isn't fair, but it was never aimed at Ltd Co's, it was aimed at employees. The Chancellor has included Directors in that, many expected that he wouldn't.
Now for something even more controversial, which I'm raising purely for debate. Although I only take a minimal salary, I have no intention of altering it.
Is it legitimate for a Director to alter their salary to a more realistic level? For example, Mr Bloggs has declared a salary of £720 a month and expects to take a dividend. Following a disaster, he realises their won't be enough profits to take his normal dividend, so backdates his salary to £3000 a month, which will reduce his profit and his CT. Under normal circumstances this would be a net gain for HMRC.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
That might have worked back in the good old days but how does that work with RTI?
Plus, the figures are averaged over three years.
To my mind its a non starter.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Is there any guidance on furloughed directors who file EPSs for 11 months of the year and then file their whole year's salary in month 12? Obviously they have no Feb figures, but the Gov guidance says that for
"Employees whose pay varies
If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:
the same months earning from the previous year
average monthly earnings from the 2019-20 tax year"
Which would imply they could claim for 80% of their month 12 from last year, so 80% of £8k(ish), which can't be right can it?!
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All thoughts are my own and should not be used as professional advice.
That might have worked back in the good old days but how does that work with RTI?
Plus, the figures are averaged over three years.
To my mind its a non starter.
Hi Shaun
Obviously you would have to amend the RTI, and in the current circumstances it would be a deliberate attempt to circumnavigate the scheme. However, where does it say it's averaged out over 3 years. The only criteria is that they are on the payroll at 28th February.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Is there any guidance on furloughed directors who file EPSs for 11 months of the year and then file their whole year's salary in month 12? Obviously they have no Feb figures, but the Gov guidance says that for
"Employees whose pay varies If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:
the same months earning from the previous year average monthly earnings from the 2019-20 tax year"
Which would imply they could claim for 80% of their month 12 from last year, so 80% of £8k(ish), which can't be right can it?!
I'm reading it that for employees whose pay varies you either base it on their February 2019 pay or the average monthly pay during 2019/20, which would rule out anyone who only receives an annual salary in March. I could be wrong though.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
The job retention scheme is for those on the payroll to receive 80% of their wages.
I see people are complaining on aweb that it isn't fair, but it was never aimed at Ltd Co's, it was aimed at employees. The Chancellor has included Directors in that, many expected that he wouldn't.
Now for something even more controversial, which I'm raising purely for debate. Although I only take a minimal salary, I have no intention of altering it.
Is it legitimate for a Director to alter their salary to a more realistic level? For example, Mr Bloggs has declared a salary of £720 a month and expects to take a dividend. Following a disaster, he realises their won't be enough profits to take his normal dividend, so backdates his salary to £3000 a month, which will reduce his profit and his CT. Under normal circumstances this would be a net gain for HMRC.
Someone has started a Change.org petition on this very subject - wonder if Chris (Bolton) did after my suggestion, ha. Might addthe link if I can find it in all the open tabs (they are completely doing my head in now, because I can no longer find anything and Im down to one screen as my other is open on a clients PC via VPN (No, Im not doing any work just now, obv! Just a watch on their emails as I wait for an important one coming in!!!
Your other comment
Ethical - absolutely not. Backdating - RTI issues as Shaun says. Strictly speaking you have time to do it , albeit not long. But you would have to go back to Feb wouldnt you? Im not sure how that helps him though and Ive not worked through the numbers but low salary = higher profits, lower tax, enough to take a dividend. Or high wage, low profits, but increased CT (due to NI - not emp allow poss), plus increased tax, so worse off. Unless there is a cashflow issue and they plan to DLA it (but may be an issue if not paid within 9mths).
Also, what happens on compliance check then? Would HMRC not view this as a bonus? What justification is there for not paying this each and every month? As you say 'deliberate attempt.....' HMRC might NOT persue it on the basis the tax take is up, unless of course the said increased payments were to drop back, which they inevitably will. Lots more Im sure, not least - us suggesting it......and getting sued when they get caught!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Is there any guidance on furloughed directors who file EPSs for 11 months of the year and then file their whole year's salary in month 12? Obviously they have no Feb figures, but the Gov guidance says that for
"Employees whose pay varies If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:
the same months earning from the previous year average monthly earnings from the 2019-20 tax year"
Which would imply they could claim for 80% of their month 12 from last year, so 80% of £8k(ish), which can't be right can it?!
I'm reading it that for employees whose pay varies you either base it on their February 2019 pay or the average monthly pay during 2019/20, which would rule out anyone who only receives an annual salary in March. I could be wrong though.
I read the same. Unless its changed and Ive missed it!
Now then Mr client - that monthly fee you didnt like for me filing your payroll......oh you like it now dontcha!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Ethical - absolutely not. Backdating - RTI issues as Shaun says. Strictly speaking you have time to do it , albeit not long. But you would have to go back to Feb wouldnt you? Im not sure how that helps him though and Ive not worked through the numbers but low salary = higher profits, lower tax, enough to take a dividend. Or high wage, low profits, but increased CT (due to NI - not emp allow poss), plus increased tax, so worse off. Unless there is a cashflow issue and they plan to DLA it (but may be an issue if not paid within 9mths).
Also, what happens on compliance check then? Would HMRC not view this as a bonus? What justification is there for not paying this each and every month? As you say 'deliberate attempt.....' HMRC might NOT persue it on the basis the tax take is up, unless of course the said increased payments were to drop back, which they inevitably will. Lots more Im sure, not least - us suggesting it......and getting sued when they get caught!
I was thinking in more general terms, not the furlough scheme. (Got asked by one client and declined)
But I've just realised that in my question there would be no need to backdate, simply increase paye going forward
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.