Take bonus instead of dividend from UK company when living in tax free country.... Possible?

[Barney2201]

We currently live on the tiny island of Sark which many of you will know has no personal tax (see my previous posts if you want the low down on Sark).

Myself and my wife are directors of a Uk company, we have just put ourselves on the payroll as we may want a mortgage at the end of the year once we leave Sark.

We started on payroll last month, our year end is end of April. To reduce our UK corp tax bill is there any reason why we couldn't take a sizable bonus in April whilst we are resident of Sark?

 

[Martin Everson]

To reduce our UK corp tax bill is there any reason why we couldn't take a sizable bonus in April whilst we are resident of Sark?

Hummm.....no but I wouldn't even as a non-UK resident.

At a stretch HMRC may take issue with paying an excessive salary as its seen as a method of eroding the corporate income tax base and artificially reducing your tax bill via this method.

You should keep records detailing and justifying the work done to warrant the bonus in comparison to previous years work for example. HMRC may just suddenly hit you with a "random" tax investigation. Remember a bonus is still an expense and like any expense needs to be justified and can be scrutinized.

In end speak to your accountant and get a feeling for what they would feel about you doing such a move.