Paying girlfriend to reduce tax bill

ClubMan said:
If this is a limited company then doesn't it require at least two directors at all times?
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Correct. A company can only have 1 shareholder but must have at least 2 directors. Professional advice should be sought before any decisions are made.
 
Don’t forget it needs a secretary also......one of the directors can take that job, but a secretary has its own responsibilities.
 
Virtually every single limited company run by married self employed businessmen ie solicitor, accountant, butcher, small builder, delivery business, bike shop, spar shop etc etc etc pays the spouse income up to the cut off point. The spouse would be working in the home and may or may not work in the business. This would only be the case where he was looking to draw an income in excess of 38,400 (last year). He would pay the 3% PRSI and the health levy anyway so the saving is approx 3500 per year.
 
davidoco said:
Virtually every single limited company run by married self employed businessmen ie solicitor, accountant, butcher, small builder, delivery business, bike shop, spar shop etc etc etc pays the spouse income up to the cut off point. The spouse would be working in the home and may or may not work in the business. This would only be the case where he was looking to draw an income in excess of 38,400 (last year). He would pay the 3% PRSI and the health levy anyway so the saving is approx 3500 per year.
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The fact that this practice is widespread does not make it legal. Bogus non-resident accounts were widespread, and the holders are now facing large retrospective bills from Revenue.

I'm no expert on this situation, but if the spouse is not working in the business, I'd be very surprised if paying them from the business is not fraudulent.
 
davidoco said:
Virtually every single limited company run by married self employed businessmen ie solicitor, accountant, butcher, small builder, delivery business, bike shop, spar shop etc etc etc pays the spouse income up to the cut off point.
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I disagree strongly with this sweeping contention. I would suggest that at the least it is a gross over-simplification.

Are you basing it on your own experience? If so, perhaps you could please explain how many solicitors and accountancy firms you know of that are structured as limited companies? The fact is that all solicitors firms and the vast majority of accountancy practices in Ireland are prohibited for professional regulation reasons from setting themselves up as limited companies.

In that context, I really wonder how much knowledge you really have of the subject?
 
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