I am acting on behalf of my business partner who is having difficulty with his wife. The business pays the Directors the most cost effective way for tax purposes. This includes a basic wage of £10K per year and Dividends around £30K per year + business expenses. His Ex wants to class all earnings for CSA purposes and I am concerned the CSA have the power to Audit the business for payments received to the Directors and in doing so identify other irregular payments like Fuel, hotel or accommodation that are genuine expenses and cause the business possible problems. What powers do the CSA have to audit a Limited Company with 3 shareholders and the Director in question holds a 36% stake in the company? Would he be able to place the shares in his new wifes name or even his new Childs to avoid this high level reporting of all our private company information.
The business expenses are fully itemized but we pay a car allowance through the form of a dividend for tax purposes rather than PAYE and pay a lesser base salary again to reduce Tax. So my primary concern is the question what powers do the CSA have to investigate a Ltd Company. Can they request bank statements for example? After reviewing what is classed as earnings it is anything subject to tax and NI which dividends are treated differently 10% up to a certain amount then 32.5% thereafter payable through the P11D self assessment. DO they count or not? Can they be challanged and if so ho does this affect my company? Yours Truly Mark