Arlo is a consultant and agreed to complete a risk review for a fee of £50,000. It will take six months and the fee will be paid in September 2020. His company AJW Ltd will receive this fee and has no other income. There are three alternative ways to deal with the fee.

(i) AJW Ltd pays Corporation Tax on the fee and the remaining funds are paid as a dividend to Arlo who has no other taxable income.

(ii) AJW Ltd pays Arlo £1,000 per month, then pays the Corporation Tax and Arlo receives the remaining funds as a dividend.

(iii) AJW Ltd pays Arlo £2,000 per month, then pays the Corporation Tax and Arlo receives the remaining funds as a dividend.