Posted May 2, 04:22 PM
Following the news that the PA Holdings case will not be appealed we can consider the implications of the ruling in this case.
The case had particular circumstances but dealt with the question of whether certain payments made by the company to its employees should be taxed as earnings or dividends. The court held that they were earnings. The implication is that tax and national insurance should be paid.
Whilst the case had particular facets it is worth considering if there are wider implications.
HMRC have acknowledged that the case does not apply to every situation and the choice of dividend or salary for most owner managed businesses is not affected. The general strategy of low salary with a top up by way of a dividend appears to remain safe.
The so called “alphabet share” arrangements may come under a closer examination. These are particularly vulnerable where the only right attaching to the shares is a right to dividends. It is less likely that HMRC will challenge arrangements where shares also carry voting rights and have capital value.
“As a relatively new start up business we are still very sensitive to costs. Recently we received a quotation from QBS Online on a “like for like” services basis with our existing accountants. We have made the decision to move to QBS which will realize a 36% reduction in our accountancy costs. This is most welcome news at a time where every penny counts.”
- Nigel Messenger, MD, Castleman UK Ltd
Using QBS has changed the way we do business. Previously we were using many suppliers to help us with things like accounts, payroll, even IT support. Now we use QBS for all manner of business procedures, which has simplified our outgoings and allowed us more time to spend on growing our business.
- DH, Haus Digital Ltd
For free updates and regular newsletters, subscribe to our mailing list by entering your email address below: