First Client -NMW/Dividend nightmare!
Good Evening All, A few weeks ago I was celebrating my first client (albeit only his bookkeeping, vat, payroll but it's a start), now I'm not so sure! I am sure he has been given some bad advice by his 'tax accountant' as he calls her but I'd welcome some opinions before broaching the subject with him. He has 2 employees to whom he pays a threshold salary plus dividends - they each hold a class b share... I see the following problems with this: They are not directors and so under their contract of employment must be being paid less than national minimum wage. They are paid dividends of different amounts. The dividend is paid monthly and not as a separate payment to the salary (looking back he has sometimes paid them in 2 tranches but never the distinct dividend/salary split. The previous bookkeeper was had passed her aat but was not MAAT nor a MIP, I am horrified at how many mistakes I am finding! I have contacted his accountant regarding this but haven't had a response, but to me this looks like an artificial arrangement to avoid PAYE/NIC?? Any advice welcomed... Thank you in advance