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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4203
Experience:  FCCA FCMA CGMA ACIS
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A limited company was set up and agreed in a meeting

Customer Question

Hello
a limited company was set up and agreed in a meeting with the accountant that both directors would receive a small wage of £600 and dividends would be paid for the remaining monthly payment of approx. £2k. The accountant has processed the full amount for 1 director as full wages resulting in a additional tax bill for 14-15 the accountant advises this cannot be reversed. Is this the case or are there any grounds for reversal or anything to retrieve the situation ?
the company was in monthly credit before the monies were paid.
Thanks
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
Your figures indicate a total income per director of some 31.2K, just within the 20% tax band for the 14/15 tax year Of this the dividends, 24K, should have received a tax credit of 10% which would satisfy the tax due thereon. As a result of his error your accountant has taxed these as income and overtaxed the director by some GBP 2.4K.
I think it unlikely that HMRC will accept this particular argument. Of course, if the company's end of the year PAYE has year to be submitted then the affair might be resolved, but with RTI reporting I think this unlikely.
So what to do; well engage another accountant with a rather better knowledge of individual taxation than is currently being displayed not to mention an inability to understand simple instructions. Ask him to make good the moneys incorrectly deducted from his own pocket and should he refuse sue him for recovery in the County Court. Furthermore report his incompetence to his professional institute, if he has one.
That, I think, will make his eyes water and the director might get his money back. I do hope that I have shown you a way forward in this matter.
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Expert:  bigduckontax replied 2 years ago.
I should add that there is also the matter of over payment of NI involved in this negligence. With a salary level of 7.2K there would be none due at all
Expert:  bigduckontax replied 2 years ago.
Thank you for your excellent support.
Customer: replied 2 years ago.

Hello There

Sorry I see that my answer was still in my text box and does not appear to have been sent to you.

Thanks for your help , yes it seem that the NI is the part which seems would have been a fairly big impact. so is this the same situation as the tax would you think ? that we may be able to reclaim the NI back.

The other director has now left a couple of weeks ago and the accountant is saying that it was on his instruction that he rearranged the payment structure for his payment.

one little question is that the first set of accounts have been prepared by the accountant but not submitted , (they are now approx. 3 weeks overdue) is there anything we could so before submitting them or is it more likely that we will have to submit them and try to challenge after submission

Thanks

Expert:  bigduckontax replied 2 years ago.
Unfortunately you cannot normally reclaim incorrect NI contributions. As the accountant claims that those were his instruction you have to fall back on the director who issued these for compensation. However, your accountant seems to have a very limited knowledge of personal taxation and I would be inclined to query the bill, indeed refuse to pay it at all.
You can submit the accounts and when next year's are prepared any adjustments can be worked through and then as year 2 accounts are filed the prior year ones can be restated and a note to that effect included in the notes to the account. Happens all the time, even in big companies!