Dividend vouchers

Dividend vouchers

Didn't find your answer?

Does any one have any experience with how strict HMRC are with Directors loan being taxed as a benefit in kind if it is above £5,000 even if there is no loan outstanding at the year end, as a dividend has been declared. For example, through out the year money has been both credited and debited to the Directors loan account, most of the adjustments are not made until the year end when the accounts are produced. Items such as mileage or expenses paid for themselves. The end result is a debit balance of £24,000. Should we produce interim dividends of £5,000 x 4 then a final dividend of £4,000 even if it is difficult to tell when the £5,000 was breached, or is it acceptable to just declare a final dividend of £24,000 at the year end date.
SALLY HALES

Replies (4)

Please login or register to join the discussion.

avatar
By AnonymousUser
09th Feb 2007 16:29

I would suggest unacceptable
Dividends and directors' loan accounts are two entirely separate issues.

As a loan account fluctuates throughout the year you will need to establish whether the £5k limit is breached at any time. If it is, you need to apply the BIK rules for the whole year, either on the average or precise basis (the Revenue will insist on the latter if it is to their advantage). As far as dividends are concerned, these are just further credits to be taken into account when establishing the running balance on the loan account. This running balance needs to be computed on a dated basis - ie every debit and credit should be applied in strict chronological order. A pain in the backside, perhaps, but if directors want to play the game they need to play by the rules. If it is difficult to tell when the £5k limit is breached then I would suggest that the record-keeping needs to be improved.

So, in summary, a dividend at the year end may avoid s419 problems but is unlikely to be of any use in defeating a BIK charge.

Thanks (0)
avatar
By AnonymousUser
09th Feb 2007 17:19

template
for this reason I provide each such client with a dividend minutes and vouchers template so that once a month they can draw up their own to cover their drawings.

Thanks (0)
avatar
By stephenkendrew
09th Feb 2007 19:01

dividend voucher
You produce a dividend voucher every time a dividend is declared!!!

Thanks (0)
avatar
By User deleted
09th Feb 2007 23:01

HBOS do it, therefore OK
HBOS issue consolidated tax vouchers (ie. one statement per tax year stating more than one dividend payment made in the year).

The dividend voucher is, of course, only half the story. It is a tax voucher.

The other half of the story is the minute of a directors meeting proposing / authorising the dividend.

In cases I deal with an Excel template is set up with the minutes and dividend vouchers already pre-prepared, just needing an entry to be typed in the minutes page for the date of payment the dividend, the amount per share and for which accounting year the dividend relates - the vouchers are then automatically completed for each shareholder for printing off.

Where clients tell me they've got their own record of minutes but haven't bothered producing the vouchers, then the consolidated tax voucher route is what I sometimes use - just key in the dates and amounts on a pre-prepared template in Excel again.

Thanks (0)