Corporation Tax screw up
Discussion
Hi,
I have a ltd company as an IT contractor and one 6 month contract last year failed IR35, my plan was just to take the money from this contract out as a bonus at the end. However because I didnt do this before my company year end, the extra £ in the ltd company is going to be classed as profit therefore subject to CT, I will then hit more tax when I take it out as a bonus, if I had done this before year end I would of avoided the CT.
I havent submitted my accounts yet, but lets assume I had a board meeting before the company year end and decided I was going to awared myself £x bonus, however I wasnt going to pay it till after the ltd year end. Can I put this bonus deferral payment as a 'Creditor' on my accounts so I don't have to pay the CT on it or is there another way around this ? If not I've shafted myself out of £4k.
I have a ltd company as an IT contractor and one 6 month contract last year failed IR35, my plan was just to take the money from this contract out as a bonus at the end. However because I didnt do this before my company year end, the extra £ in the ltd company is going to be classed as profit therefore subject to CT, I will then hit more tax when I take it out as a bonus, if I had done this before year end I would of avoided the CT.
I havent submitted my accounts yet, but lets assume I had a board meeting before the company year end and decided I was going to awared myself £x bonus, however I wasnt going to pay it till after the ltd year end. Can I put this bonus deferral payment as a 'Creditor' on my accounts so I don't have to pay the CT on it or is there another way around this ? If not I've shafted myself out of £4k.
Edited by BumFLuff on Wednesday 17th September 15:23
If you haven't submitted your accounts yet...
...get professional advice on how best to reduce your tax liability.
You can "accrue" for payments logically part of an accounting year but not physically made. But for most tax efficient payments and minimum risk you need a tax pro to help.
...get professional advice on how best to reduce your tax liability.
You can "accrue" for payments logically part of an accounting year but not physically made. But for most tax efficient payments and minimum risk you need a tax pro to help.
You can declare a bonus and show it in the year end accounts even if the bonus was not actually paid by the year end date. In fact, the bonus can be credited to the Director's Current Account where it becaome due and payable to the the director (the "creditor" you mention).
The Revenue will accept this position and allow the bonus as a bona fide deduction in the accounts PROVIDED all the PAYE and NI due on the bonus has been or will be paid within 9 months of the year end date.
The Revenue will accept this position and allow the bonus as a bona fide deduction in the accounts PROVIDED all the PAYE and NI due on the bonus has been or will be paid within 9 months of the year end date.
Great thanks everyone 
, I asked my accountant the same question at 9am this morning so far no response apart from acknowledgement of email, think I need a new accountant
Looks like I am ok then, I've only been beating myself up all that I had probably lost £4k due to not being on top of it all.
, I asked my accountant the same question at 9am this morning so far no response apart from acknowledgement of email, think I need a new accountant Looks like I am ok then, I've only been beating myself up all that I had probably lost £4k due to not being on top of it all.
Eric Mc said:
You can declare a bonus and show it in the year end accounts even if the bonus was not actually paid by the year end date. In fact, the bonus can be credited to the Director's Current Account where it becaome due and payable to the the director (the "creditor" you mention).
The Revenue will accept this position and allow the bonus as a bona fide deduction in the accounts PROVIDED all the PAYE and NI due on the bonus has been or will be paid within 9 months of the year end date.
Ahem. You are the man, Eric. The Revenue will accept this position and allow the bonus as a bona fide deduction in the accounts PROVIDED all the PAYE and NI due on the bonus has been or will be paid within 9 months of the year end date.
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