Hi All,

I urgently need advice on a strange practice by some accountants when doing accounts for single professionals who've set up a Ltd Company to receive gross pay and then have to account for tax. Ideally they should be inside IR35 but for some reason they are left to be outside it.

So I've got a new such client, and what their accountant used to do is to submit their income earned through the Company invoices as if it was earned by them as sole traders/ self employment. So what happens is that they clear out all business income as 'admin' expenses, leaving no taxable profit. Then just show the bank balance and Unpaid Called up share capital on the balance sheet. So no 0r scant corp tax, and no dividend at all.

Then they now submit income as self employment income and detail the expenses, to end up with a figure for taxable profit which is then taxed at 20%.

I find this highly unusual. Does any of you do things like this?

My understanding is that everything goes through the business and the business then pays corporation tax at 19% on taxable profit. Then the owner director draws dividend from the profit after tax and declares dividend income and pays the current 8.75% tax on it (after dividend allowance deduction).

Have I missed something or are these accountants just being 'difficult'? To me they are 'refusing' to treat their clients as Ltd company Director owners and instead treat them as Sole traders. 

Help me out guys. I'm going 'doolaly' over this.

Thanks.

Farouk