Directors bleeding companies dry with illegal dividends and loans

Deputy Editor
Sift Media
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The number of directors taking illegal dividends or loans from their companies is on the increase, and it’s been triggered by the income tax increase, according to insolvency experts.

Data from the Insolvency Service shows that 2,169 directors of insolvent companies faced disqualification proceedings in the year to March 31 2010, up 17% from 1,852 the year before.

The temptation by directors and owners of businesses to pay themselves an abnormally large special dividend before the increase in the highest rate income tax band to 50% on April 6 2010 may have triggered the spate of illegal dividends, said Keith Stevens, a partner at Wilkins Kennedy.

“A couple of holiday homes, a taste for sports cars and an expensive divorce settlement will normally come with a big debt that...

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04th Aug 2010 12:28

Directors bleeding

"

HMRC wants these directors banned and they want to pursue these directors through the courts for all the money that they can..............................    "

 

That'll be the day!  Bring it on ...

 

 

TheAncientOne

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By frauke
04th Aug 2010 13:23

Never going to happen......

Still too many companies get Struck off the register due to the director taking all the money in the accounts and not doing the paperwork.  I have refused to work for these companies in the past -  because they can't pay thier bills (including mine) as the Director has spent all them money on themselves.  Only to see Camplies house strike the companies off years later due to non submission etc....   Now it tends to happen sooner - but it is still common place.

Every case I have seen - they have got away with it.

 

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05th Aug 2010 20:47

give them an exam in order to become directors

 

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A while ago I started writing a quiz for new directors who come to me, but of course it’ll never catch on…

 

some sample questions........

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why do you do accounts for me every 5 minutes

 

So I can practice my reading

They are free scrap paper

To fob off HMRC

 

what is tax?

 

It is what pays for the war in xxx

what the little people pay

what holds carpets down

 

what expenses may I legitimately claim against my business

 

Anything I need whilst living my hectic social life

Nothing per HMRC

Loads, but judiciously drafted to fool HMRC into thinking it’s all for my poverty-struck business

 

 

etc... it's a serious subject, but HMRC haven't a clue how to slow them down. I can tell them how to make £m, but they'll never ask me.

 

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09th Aug 2010 12:54

Illegal loans and dividends

I know everyone gets hot under the collar here - but I ensure my clients fully understand the implications, that we keep a close eye on withdrawals and do the paperwork, look at reserves on-going and if your clients need to obtain regular tax effective withdrawals - have a look at EBTs etc.   Or dont act for them.  or do the maths - some of the company cars now are worth running through BIK and clients can get a lot for the tax charge if you plan ahead with salary, dividend, loans and pensions.

 

 

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