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Posted Thu, 03 Aug 2023 13:59:21 GMT by Robert Beliaiev
Hi, my mother who is in her 50s was going to do some work for the company of which I am the sole director and majority shareholder. My mother also has a small amount of shares in the company. The company paid my mother £6000 by way of a PAYE salary for the work that she was supposed to have done, but due to personal circumstances she was not able to do much. I do not want to reclaim the payment from her and I was advised by the company accountant that given the amount involved this is ok, as I do not have to demonstrate that any work was actually done. I note that all arrangements with her were verbal and there are no formal agreements in place (i.e. no employment contract). Apart from this £6000 by way of a salary and £2000 of dividends my mother did not receive any payments from the company. Do you agree with the advice of the company accountant? If not, what steps should be taken to rectify? The company accountants also advised that: (a) the salary payments can be made by a lump sum at the year end (rather than monthly) (b) payslips from a previous tax year of the employee can be amended retrospectively and an additional payment made (this is in relation to a different employee) Can you please let me know if you agree with the above? Thanks!
Posted Fri, 04 Aug 2023 15:02:00 GMT by HMRC Admin 20
Hi Robert Beliaiev,

From a PAYE point of view you can pay employees what you wish regardless of the work done.
I'm not sure if other departments such as Corporation Tax etc would have issue with this as it could be used as an avenue for fraud.
You may have to contact these other departments to check if you are required to do anything further.

Thank you.

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