To ask why people think directors that take dividends are tax avoiders?

[Milo2]

Small Ltd companies are currently left out of the UK government funding. Why? The directors still have families to feed and bills to pay.

I’ve seen a few people on here rubbing their hands with glee. Saying things like ‘good it serves them right for taking dividends’.

Some have compared directors to those that avoid paying tax and it’s completely unjustified.

Am I being unreasonable to ask why there is so much hate for these directors?

Also would you be upset if you had no hot water or heating to find that your local heating engineer had gone bankrupt and couldn’t help you? If so, why would you hate them so much when all they do is work hard and pay their taxes just like everyone else?

@Kazzyhoward alright calm your chebs. I don’t even know the difference between directors, sole traders and partnerships.

Blimey it was just a question! Which I kind of regret asking.

Calm down

@Kazzyhoward yes I’m aware that liquidation is different from bankruptcy- as the post referred to loss of home I assumed that she did actually mean personal debt and bankruptcy. I’m not so familiar with the rules around insolvent liquidations but wouldn’t be surprised if there were similar provisions re running up debts prior to insolvency.

Maybe ask your accountant what law they are referring to?

I think unless it's a regulated industry there is no law to stop this.

If they're allowed then there's nothing wrong. People just like complaining

It just says here the Inland Revenue may take an interest, not that it's specifically illegal:

www.safeworkers.co.uk/employingyourspouse.html

I think unless it's a regulated industry there is no law to stop this.

To be fair she's very straight and likes things to be in order. She might have just been making sure I had a paper trail in case the inland revenue sniffed around and I thought it was a legal matter.

I thought this setup was Ok as I know several people doing it.
It's impossible to police - how do you prove what work someone is doing?

These benefits will only last while in lock down and after that usual rules will apply about level of savings.

Well that's bollocks isn't it? You already know the governments plans do you? Because they don't!!

Since furlough applied before lockdown, and lockdown has been announced for three weeks and furlough for three months, I can think we safely assume you are taking out of your arse.

They don’t keep it a secret either

If HMRC knew, they wouldn't get away with it. There have been court cases and tax enquiries where wages to spouses who do nothing have been disallowed and tax assessments raised. The problem is that HMRC are pretty useless these days following Gordon Brown's merging of the different tax authorities and laying off thousands of experienced tax inspectors to be replaced by minimum wage workers in call centres. Who'd have thought that was a bad idea???

@VanGoghsDog No need to be so rude. No I don't know, but I really can't imagine the whole benefit system is suddenly going to become much more generous in the medium to long term. And the government themselves have said it is a temporary measure.

The chancellor has already said that these are temporary measures and the rate of tax paid by the self employed will be changed going forward. I don't think he could have made it any clearer.

The treasury already have small limited companies in their sight with the ir35 changes.

Someone has to pay for all this and you can be sure it won't be the likes of Richard Branson or Jeff Bezos.

@Kazzyhoward I know someone who used to work in the inland revenue checking inheritance tax paperwork. She said they checked a decent percentage and really double checked every figure, so it was hard to get away with lying. Whereas now she says unless it is outrageous you can pretty much get away with lying.

And realistically we all know lock down is going to be 3 months.

So you could claim unemployment benefit?

Also if you pay it too early they send you it back.

Of course you have to fold your company? Why do you think we would not know that?
And yes I know it is actually called JSA, had to claim it last year for a bit. Pedantry is not an attractive quality.
But if you really were not in business any more, then of course you would claim it.

@Smilethoyourheartisbreaking are you sure? I’m pretty sure company directors can claim jsa without dissolving the company- unless there’s been a recent rule change I think you’re wrong there

With respect that’s not quite accurate- going on jsa for a few months doesn’t mean that you have to fold the company or that you can’t try to find work. I’ve known a few IT contractors who’ve gone on jsa while between contracts before and while I don’t personally agree with their decision in most cases, it was perfectly legal and actually a relatively straightforward process based on their feedback.

the anecdotes are only relevant in terms of how easy the process is, however the rules around jsa are a matter of fact and clearly show that you are incorrect to state that a director would need to fold the company to claim JSA.

I'm a limited company and I work like that to limit the liability from my work. If I make an error (which I haven't so far), a business client could only come after my business assets, not my home.
I pay vat, then 19% corporation tax, then personal tax. Overall, I think don't I pay less tax than someone who's on PAYE. That's a myth from decades ago.