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?

People hate company owners because they see them as trolls sat on a massive pot of money throwing peanuts to their mistreated staff. People are gonna be shocked when we all go bust and they lose their jobs and services. They'll just say we cheated the system and ran off with our pot of money

Goodluck to you, can you get the 10k grant? We're very lucky that we qualify and we've furloughed everyone but we've got companies cancelling their payments left right and centre but we've still got to pay our bills.

I am pretty sure people in general dont hate business owners
One of those things I have only found on MN
Hopefully most of us have tough skins and dont really give a scooby about the negative or ill informed comments

In my experience of over 37 years of being an accountant, the "one man band" freelancers/contractors generally use the big chain accountants set up purposely to cater for one man contractors.

Anecdotes are fun. I'm a one person band/contractor currently working for an international investment bank as well as two other clients. Funnily enough, as part of my role I also manage the contractors, and none of them seem to use big chain accountants. I certainly don't, I use a single person accountant who charges me about £300pa.

Wow your accountant is cheap Van!

I pay a grand a year for my company accounts, then 20 a month for pay roll and 300 for my personal tax return.

She does do all my bookkeeping and chasing me, and she keeps me up date with any law changes though.

She's a one man band too and I love her, she's worth every penny.

I do all my own payroll, VAT (not currently registered but have been in the past) expenses, keep very detailed records. So her work is very easy. She has no access to my bank account or invoicing software, I do all that and send her the soft bank statements and invoice summary for the year.
I keep up to date with the law myself but she does send me details of any changes.

That £300 is my company return and my personal tax return.

I do all my own payroll, VAT (not currently registered but have been in the past) expenses, keep very detailed records. So her work is very easy.

"Bums on seats" contractors usually don't do any of that which is why they engage the "factory" accountants to do it all for them, hence why they pay more for their accountancy.

Of course, if you can do most of it yourself, it's going to be cheaper.

I don't know what a "bums on seats" contractor is. I have a brain, I'm capable of running straightforward accounts.

I don't know what a "bums on seats" contractor is

It's a term for people are really are "disguised employees" who are in no way a genuine small business, i.e. those engage by banks, energy firms, etc to work in call centres etc, where they don't want particular experts with specific abilities (like proper consultants), they just want "bums on seats" to do pretty basic drudgery work like answering basic customer queries, giving basic remote IT support etc. They're the kind of people who aren't interested in being in business, hence not interested in teaching themselves about book-keeping, taxes, etc., and happy to pay £1k-£1.5k for abdicate it for someone else to do it, usually the big accountant factory firms, where instead of an "accountant", they get a succession of data input clerks going through the motions. They're exactly the kind of people for whom IR35 was targetted, but unfortunately lots of other people are being caught in the net.

I run a business and am not contracted by anyone and have zero interest in doing my own accounts when I can pay someone else to do it.
How is that any indication of whether it's a proper business or not?

I have particular skills and accountancy is not one of them; I pay someone else to do it. Doesn't mean I'm not a good business person just means my time is better spent doing something else.

How is that any indication of whether it's a proper business or not?

It's not, the last few posts have veered into accountancy costs, and unsurprisingly, for people who are able and willing to do most of it themselves, their accountancy costs are cheaper, for those who want someone else to do it all, their costs are higher. Nothing to do with which way is right or wrong or what it may or may not infer.

@Kazzyhoward totally agree.

Small business accountants do not charge a fortune for run of the mill accounting. Freeagent has really reduced fees as you input all the data and the accountant checks it over and produces your end of your reports etc for you to sign off. Any director is responsible for the errors. Not the accountant. I used my accountant to check my figures tallied with their calculations.

And accountancy fees have nothing to do with being a proper business or not.

@VanGoghsDog a bums on seat contractor is also known as a permietractor

And accountancy fees have nothing to do with being a proper business or not.

Agreed, sorry, we went off topic there.

I can't believe a call centre fake contractor would pay £1k pa to have their accounts done. Maybe I should be an accountant. It's not exactly difficult!

I can't believe a call centre fake contractor would pay £1k pa to have their accounts done. Maybe I should be an accountant. It's not exactly difficult!

It's usually cheaper than the alternative of using an umbrella company!

Maybe I should be an accountant. It's not exactly difficult!

That‘a hilarious 😂
You do realise it’s a lot more complicated than the man down the pub says?? Accountancy is far more than bookkeeping, there is a reason properly qualified accountants train for years and spend several days per year on CPD. Yes if your business is very straightforward you can do a lot of the bookkeeping but many businesses have a lot more complex issues.

Is your accountant charging £300pa for company accounts qualified?

Basic company accounts are not difficult, and you don't have to be a qualified accountant to do them. There are lesser qualifications if the turnover is under half a million of the company you are doing accounts for. I reckon I could do this level, although because I am not qualified I would not be allowed to.
Qualified accountants train for years for the complex company accounts of large firms.

And a lot of accountancy firms get staff on far lower pay to do the simpler accounts, and then an accountant signs them off.

There are lesser qualifications if the turnover is under half a million of the company you are doing accounts for.
Not sure where you got that form but it is wrong.

Unless you are auditing you don’t need to have any qualifications to call yourself an ‘accountant’. Anyone can call themselves one, even my 16yo but that doesn’t mean they have any clue what they are talking about. Which is why you really want a properly qualified accountant to be advising you on the relevant tax laws etc. Basic accounts are not difficult but keeping up to date with several hundred pages of complex tax changes each year plus understanding what they are about is what is somewhat more difficult. That is what you pay a qualified accountant for, the fact they know certain laws exist and how best to use them to save you money. That’s ignoring the proper format of company accounts, although that has got a lot easier with micro accounts and FRS105.

I am talking about auditing. Anyone can keep accounts. I have kept accounts. Totally different if you are auditing company accounts.

And doing accounts and payroll for a small company is piss easy if your work is all UK based. Keeping up with tax changes?? You use software with updates that tell you all these kind of things. It is not hard.

Why on earth has the conversation gone on to this?

What has price of accountants got to do with anything?

I pay a qualified accountant a lot of money to do my accounts because actually YES I do find doing my accounts hard. I don't have the skills or want to do them. I would rather spend my time doing something in the business that I am good at. I'd also rather pay for someone I trust and have a relationship with.
I have had the same accountant since I was a teeny tiny business and as I've grown so has her responsibilities and her charges. She knows everything about my business and therefore I have to trust her. The same way as if you wouldn't want any Tom dick or Harry looking through your personal accounts.

If I did my accounts myself I would make mistakes, and I would worry all the time I was doing it wrong.

I don't know where people are getting this idea that only big firms cost alot money of money to do business accounts? I find that any established accountant with a good reputation is going to charge a lot.

Weirdly making sure I'm paying the right tax and not doing anything dodgy is important to me so I pay for it.

And I'm sure if we were all saying that we did our own accounts and refused to pay for an accountant we'd be accused of fiddling our books.

We pay an accountant because it’s cost efficient - we would spend a day doing the quarterly accounts, returns, payroll etc but earn more in a day than it costs to pay the accountant for that work. Plus working internationally means that the accountant keeps on top of the complicated stuff and keeps everything straight.

And doing accounts and payroll for a small company is piss easy if your work is all UK based. Keeping up with tax changes?? You use software with updates that tell you all these kind of things. It is not hard.

People pay for others to do lots of things they could do themselves if they had the time, ability and inclination. What's the difference? People have cleaners, gardeners and decorators but could easily do it themselves. Anyone handy with their hands could do their own plumbing/electrical repairs. My OH services our cars himself so never has to pay for a garage to change the oil or brake pads etc. Some people CHOOSE to pay others to do things that they can do themselves for a multitude of reasons.

Is your accountant charging £300pa for company accounts qualified?

Yes.

The thread is AIBU to ask why people think directors that take dividends are tax avoiders?

Quite straightforward, I’d have thought. You only pay 20% tax on dividends. So taking dividends is avoiding tax. QED.

Quite straightforward, I’d have thought. You only pay 20% tax on dividends. So taking dividends is avoiding tax. QED.

Those dividends have already been taxed. You take dividends from profit that has already been taxed through corporation tax.