As we saw last month, company tax law is a quagmire waiting to entrap the unwary. In this concluding part, another accountant offers his advice to staying out of trouble. This issue, we speak to Kieron BathamTomkins, Senior Tax Manager at accountancy firm, BHP. Payroll and paperwork Kieron Batham-Tomkins sees clients who don’t understand that on top of Companies House and HMRC filing requirements there’s the detail and “obligations of running a payroll and the need to complete paperwork such as dividend vouchers.” “Directors,” as Kieron points out, “with a limited company as the working entity, will be extracting profits via salary and dividends, and in order to pay salary, some form of payroll system will be required which allows Real Time Information to be sent to HMRC and provides a payslip each month, along with a P60.” He adds that “when declaring dividends, it is also important to make sure that paperwork is completed with regards to board minutes and dividend vouchers.” Of course, most owner managers do this at home. Regardless, he reminds that “the paperwork still needs to be on file to show that a decision was made on a set date to declare dividends and extract remuneration.” Not checking tax rates Another problem area for Kieron is the lack of tax planning when directors pay themselves. He knows that as a rule of thumb, the most tax efficient way of extracting profits from a company is via a NI level salary and the remainder being extracted as dividends. By ‘NI level salary’ he’s referring to a level of salary where no employee National Insurance arises, but where the individual will still receive a stamp towards their state 12 AFTERMARKET OCTOBER 2023 BUSINESS www.aftermarketonline.net INCORPORATE IN HASTE AND MAKE MISTAKES AT LEISURE Part two: The rundown on how to avoid problems around how your business is set up concludes with more handy advice BY Adam Bernstein
RkJQdWJsaXNoZXIy MjQ0NzM=