Where do I declare dividends in HMRC's Computations software ?

Where do I declare dividends in HMRC's...

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I worked for a recruitment agency last year for 7 months and was asked to set up a limited company to do so. It only turned over £9600 and has now ceased trading. I would like to learn how to file my CT600 to HMRC myself as I made no profit from my limited company, so any help would be appreciated.

I have now reached "Computations" and am stuck as to where to insert my dividends - as I have not done so I am being told my taxable profits are £4600. In my CT600 I declared this profit of £4600 as money paid out as dividends. Does anyone have any advice as to where I insert my dividends in the computations software? 

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By johngroganjga
01st Jul 2015 21:02

We have no idea what software you are using, as you have not told us. But you need to sort out the company's accounts before you go any further. Let's take as read that your company made a profit of £4,600. That should be in the place in your profit and loss account called profit before tax. Next comes the corporation tax payable on your profit - say 20% of £4,600 or something like £920. Next comes your profit after tax, which is of course £3,680. In a note towards the end of the accounts there will be a place for entering the dividends as a deduction from the profit for the year. So if you paid dividends of £4,600 but your profit was only £3,680 you will have a deficit, and your company is probably insolvent. What does the top half of the company's balance sheet look like?

The above is what I suggest you deal with first. But if you insist on going straight to the corporation tax computations, the answer to your question about where to put the dividends in the computation is that you don't put them anywhere. When you are calculating the company's corporation tax liability the dividends are irrelevant - they don't come into it at all.

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By petersaxton
01st Jul 2015 21:12

As John said

You should prepare draft accounts before tax and then calculate your tax. Then you can prepare your tax return and tax computations and then finalise your accounts.

You say "I am being told my taxable profits are £4600". Who is telling you this? Are they an accountant? If they are why don't you ask them to do the rest of the work?

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By Marion Hayes
01st Jul 2015 22:12

You need to get some help.

 I assume you are filling in the Revenue software CT600.

Dividends do not form part of the computations. If a dividend has been paid it is only an entry on the profit and loss page if I remember rightly.

Dividends do not reduce your taxable profit at all - but did you take dividends or was it salary which would have reduced the taxable profit.

It is a false economy to try and do this yourself so look for a local accountant to help you. The last thing you want is to get it wrong as that is always extremely more expensive in the long run

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By andy.partridge
01st Jul 2015 22:22

School error
1. I made no profit
2. Where do I show dividends?
It is unlikely, not impossible, but unlikely that these two points are compatible.
You were mistaken to assume that you would be able to get by without professional help.

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By Tim Vane
01st Jul 2015 22:22

Yes as mentioned above it sounds like you do need some professional help.

Here are some questions that you should think about answering for your own comfort. You don't need to give your answers here (though you can if you want), but if you cannot answer them then you may already be out of your depth.

First, you say your company turned over £9600. Fair enough. But then you say that your taxable profits are £4,600. So you must have expenses of £5,000 - is that a salary? If so, then fine, but I hope that you declared and paid it properly, and have put it through a payroll. I also hope it is salary as I can't think of any other way to rack up £5,000 work of expenses in a recruitment company, but I could be wrong. If any of it is NOT salary, are you sure that the expenses are allowable for tax purposes?

So, now look at the taxable profit of £4,600. If you have taken that out as a dividend, then that dividend was probably illegal - you have a tax liability that has not been fulfilled so you now have negative reserves and, as mentioned above, you are insolvent.

Finally, you say that the company has stopped trading. Have you thought about what you are going to do with it now?

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By Discountants
02nd Jul 2015 08:01

For or through a recruitment agency
A further point is did you work for a recruitment agency or did the agency find you work for which they invoiced the end client and then paid you a s agreed with them.
If so then ypur company may fall into IR35 and tou need to check thia as it leads to a vastly different tax treatment

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