This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Extracting Profit - Minimum Tax??

guestman
Posts:2
Joined:Fri Jan 24, 2014 10:12 pm
Extracting Profit - Minimum Tax??

Postby guestman » Fri Jan 24, 2014 10:53 pm

Hi guys,

I know this is probably too complicated to answer on a forum - I will go and see a financial adviser - but any ideas I get on here would be amazing! (thank you!)

A UK limited company - which will end up with £400k profit in the bank at the end of the next year. What would be the most tax efficient, LEGAL (avoidance NOT evasion! :D) way to get as much of that money out of the business?

I'm trying to pay only the 20% corporation tax - or as close to that number as possible.

One idea I had was - maybe have X directors - pay each one £8k - and then pay each dividends of £40k. (How legal would this be?)

I've just started looking into "Employer Financed Retirement Benefit Schemes" - but I think they seem risky, maybe they don't even work any more. They also look like they may be for companies earning BIG money.



Any ideas would be great! Thanks again. :lol:

wamstax
Posts:1954
Joined:Wed Aug 06, 2008 3:39 pm
Location:Operate Nationally but based in Aberdeen
Contact:

Re: Extracting Profit - Minimum Tax??

Postby wamstax » Sat Jan 25, 2014 12:20 am

Let us be frank - using aa tax avoidance scheme is risky and you could end up paying somebody who is peddling that too good to be true idea for £10K or so and then when HMRC enquire into the matter you end up paying the tax that you would have paid anyway plus interest.. Do you need to get the money out of the company or could you engage diversification strategy(ies) or extract over a number of years
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact (mob 07751720507) can be obtained from websites

AvocadoK
Posts:1232
Joined:Wed Aug 06, 2008 3:46 pm
Location:Lancashire

Re: Extracting Profit - Minimum Tax??

Postby AvocadoK » Sat Jan 25, 2014 9:03 am

Can I volunteer to be one of the individuals receiving £40k?

I would have to keep it, though, rather than there be any understanding to pay it on to you, otherwise it would simply be a sham arrangement that would not be effective in saving tax.

wamstax
Posts:1954
Joined:Wed Aug 06, 2008 3:39 pm
Location:Operate Nationally but based in Aberdeen
Contact:

Re: Extracting Profit - Minimum Tax??

Postby wamstax » Sat Jan 25, 2014 11:20 am

Hi Avo,
I thought that was a bit obvious and had immediately thought it would defeat the purpose with HMRC applying the settlements legislation to guestman (we all know that she is a she really to conceal her identity from the HMRC snooper here) and even saying that it was still taxable as he (or sure it is she) had transferred his assets abroad - as with that kind of money I would have already taken up residence in Bermuda
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact (mob 07751720507) can be obtained from websites

guestman
Posts:2
Joined:Fri Jan 24, 2014 10:12 pm

Re: Extracting Profit - Minimum Tax??

Postby guestman » Mon Jan 27, 2014 12:36 am

transferred his assets abroad - as with that kind of money I would have already taken up residence in Bermuda
LOL :D You cant just leave your annoying family and go and live in Bermuda! Even if it has 0% tax. And great weather. And cheap food. And cheap drink.... Sorry what?

I spent over 30mins reading your site Bill. :!:

Every idea I've had to avoid tax -- you offer the support for when you get caught doing it. (Which means all my ideas are old, no longer working, and just terrible)

There has to be some legal ways to avoid tax. Jimmy carr - what he was doing wasn't illegal - But from what I've read - it no longer works, and now people are having to pay back all the tax they owed - plus interest. So not a good idea in the long run.


I'll be honest - I've only got maybe another 2 or 3 years making this GREAT money - then it will all stop. If I had a business - where I knew I was going to keep getting it for years and years - and could put money back into the business to help make more -- id just happily pay my tax!!

But this money will STOP in about 3 years - then its back to nothing. The money I will have given to the tax man - could have let me forget about working for the rest of my life. (And I know the money left after tax is still great - but that other money would help - it would have got me a house or something!)

Maybe I need to talk to the accountants of celebs or sports people with short careers - they must try something to keep as much money as possible for when their careers are over.


Thanks for the replies anyway guys! :P

Incredulum
Posts:2765
Joined:Thu Dec 03, 2009 5:35 pm

Re: Extracting Profit - Minimum Tax??

Postby Incredulum » Mon Jan 27, 2014 12:13 pm

In which case, keep the cash in the company. Over the next ten years, pay out £40k annually and you'll have no further income tax liability (if you have no other income).

jbs1
Posts:11
Joined:Sun Jan 22, 2012 11:01 pm

Re: Extracting Profit - Minimum Tax??

Postby jbs1 » Thu Feb 06, 2014 9:57 pm

If you want to significantly reduce your tax liability, and most importantly 100% legally, then the way forward is setting up a ‘Creditor Protection Trust’.

The CPT structure is legal, uses statutory relief’s and involves no tax avoidance and has an unbroken track record of success

Give me a shout if interested

wamstax
Posts:1954
Joined:Wed Aug 06, 2008 3:39 pm
Location:Operate Nationally but based in Aberdeen
Contact:

Re: Extracting Profit - Minimum Tax??

Postby wamstax » Fri Feb 07, 2014 3:59 am

Creditors Protection Trust? - What exactly is entailed in this and why or how can it reduce the tax liability? Is it offshore or on the UK mainland?
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact (mob 07751720507) can be obtained from websites

wamstax
Posts:1954
Joined:Wed Aug 06, 2008 3:39 pm
Location:Operate Nationally but based in Aberdeen
Contact:

Re: Extracting Profit - Minimum Tax??

Postby wamstax » Fri Feb 07, 2014 4:19 am

I assume that the settlements legislation in relation to individuals and their controlled companies will not be relevant as I understand that such structures have contributions of the business (even in a company?) being made into a trust that the director would be a beneficiary of...... seems a loan to a shareholder/director may well be in point if not being an arrangement in its own right.

Stick to the simple it wont raise HMRC eyebrows and risk a challenge.
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact (mob 07751720507) can be obtained from websites


Return to “Business Tax”