Can A Director Also Be A Consultant To Their Own Company?

The directors said yes, HMRC said no ...

Click here to view a mobile version of this blog post  
 
 

POSTED BY HELEN BEAUMONT ON 22/05/2019 @ 8:00AM

National Insurance is a significant cost for any employing company. Therefore wouldn't it be great if you could save National Insurance by segregating your duties as a director from your other duties?

HMRC took Petrol Services Limited to tribunal over the director's consultancy agreements!

HMRC took Petrol Services Limited to tribunal over the director's consultancy agreements!

photo by ethan cull on unsplash

This means you become a self-employed consultant to your own company. This was recently tested in the case of Petrol Services Limited v HMRC at a First-Tier Tribunal (FTT) where it was found that payments to two directors were effectively remuneration liable to income tax and NICs under PAYE.

Here are the circumstances in which the case was heard:

HMRC made the case that the directors had contracts of service with Petrol Services Limited and were, in fact, employees of the company. Therefore, they should be paying income tax and National Insurance contributions on a PAYE basis.

The directors said their contracts of service were outside the scope of their directorships so could not be covered by PAYE because they were performing services outside the scope of being a director of the company.

The FTT ruled in favour of HMRC, however, they did dismiss the information HMRC obtained from PSL's suppliers as insubstantial, but held that payments were remuneration and should have been paid by PAYE. They also confirmed that directors would be expected to perform services outside the scope of being a director, so dismissed that part of their argument.

"Would you like to know more?"

If you're a company director and unsure if your remuneration agreements are covered by PAYE or a consultancy agreement and want to review your tax position, do give me a call on 01908 774323 or click here to ping me an email and let's see how I can help you.

Until next time ...


HELEN BEAUMONT
Join my mailing list! Click here and be one of the first to know when I publish a new blog post!

Leave a comment ...

Share the blog love ...

Précis (0)

Share this to FacebookShare this to TwitterShare this to LinkedInShare this to PinterestShare this via Buffer


More about Helen Beaumont ...

Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.





More blog posts for you to enjoy ...

Structures And Buildings Allowance Update
HMRC has now published its draft guidance ...

Capital Gains Tax: Increases For Landlords Are On The Way!
You've got until 6th April 2020 ...

Transferring Property Tax Efficiently Using Trusts
Ensure you get the right tax advice ...

How Should You Own Your Business Premises?
There are various tax implications ...

No Deal Brexit: For UK Employees Working In The EU, EEA Or Switzerland
Will double social security payments be required?

Maximising The Claim For Business Expenses
Make sure you claim the right expenses ...

Claiming Loan Interest Relief
Accurate records could save you tax ...