Share this content

Declaring Dividends

Didn't find your answer?

If someone owns 49% shares in a limited company (not a director).  Dividends have been paid to this person into their account (no dividend receipt). Their Dividends have also gone into their partners account, whom is a director and 51% share holder. He has spent said dividends that went straight into his account. Who declares what on a self assessment? 

Replies (20)

Please login or register to join the discussion.

avatar
By Truthsayer
11th Jun 2020 10:37

Is this a hypothetical question? Why the 'if'? I suggest you write this grammatically to start with, as your bad phrasing is ambiguous. Then give us the full facts of what has actually happened, including stating who (if anyone) you act for.

Thanks (0)
Replying to Truthsayer:
avatar
By Tax Dragon
11th Jun 2020 10:41

Much nicer. (Maybe I should have been listening too...! :-))

Thanks (0)
Replying to Truthsayer:
avatar
By MattRed
11th Jun 2020 11:55

A friend of mine has come to me for some advice.

She and her ex-partner own 49% and 51% shares in a limited company respectively.

She receives a monthly salary and dividends into her account, however has never received a dividend voucher at any time.

Her accountant is stating she has received £85k in taxable dividends within her self-assessment, however only £4k went into her bank the other £81k went into her partners account which she has not had access too.

Where does she stand in her self-assessment? What must she declare?

Thanks (0)
Replying to MattRed:
avatar
By Tax Dragon
11th Jun 2020 12:11

That's no laughing matter. You should have said all that up front.

I should think her claim, if she has one, would be against her ex partner to get her money back. Point your friend towards a solicitor. I don't see how you can help.

(There's no tax relief if she fails in that claim, sorry.)

EDIT... sorry, misread the question, thought she was the director. There was a case last year where one spouse was 'used' in a similar vein by the other. It was decided that the income was not taxable (on the non-receiving spouse). The starting point may well still be a chat with the solicitor though.

Thanks (1)
Replying to Tax Dragon:
avatar
By MattRed
11th Jun 2020 12:12

Thank you for the response; I was under the impression that without a 'Dividend Voucher' which states the dividend amount paid and to whom. HMRC would class the transferred amount as salary and not a dividend?

Therefore if he has transferred money from the business into his account and simply called it a dividend - It would in fact be a salary made to himself?

Thanks (0)
Replying to MattRed:
avatar
By Tax Dragon
11th Jun 2020 12:17

With respect, you are speculating about what happened. I can't join in with that.

Thanks (0)
Replying to Tax Dragon:
avatar
By MattRed
11th Jun 2020 12:17

Thank you for editing; she is currently in contact with a solicitor to try and resolve this.

However, her accountant has submitted her self assessment inclusive of all 'so called dividend payments' and therefore she has significant tax due without the means to pay it.

Can I assist her in re-filling her self assessment which does not include the dividend payments made to her partners account or is she still accountable for it?

Thanks (0)
Replying to MattRed:
avatar
By Tax Dragon
11th Jun 2020 12:35

I wouldn't. What was on her previous year's tax return? Is she as innocent as you think her to be?

But... she could try talking to the time-to-pay team, if this is 2018/19 tax that you are talking about.

Thanks (0)
Replying to Tax Dragon:
avatar
By MattRed
11th Jun 2020 12:41

Thanks for your help, I don't suppose you know the case name?

Thanks (0)
Replying to MattRed:
avatar
By lesley.barnes
11th Jun 2020 13:59

Vowles [2017] TC 06123 - possibly.

Thanks (0)
Replying to MattRed:
avatar
By Truthsayer
11th Jun 2020 12:33

Did she in any way agree to her dividends being paid into her partner's account? If so, she is taxable on them. This sounds like a question for a lawyer rather than for an accountant. You should not assist her in 're-filling' her return. Her accountant should do that in consultation with a solicitor's opinion.

Thanks (0)
avatar
By Tax Dragon
11th Jun 2020 10:38

Subject to anti-avoidance, each declares his or her income.

(Well done though.... you've made the world's funniest joke.)

Thanks (0)
Replying to Tax Dragon:
avatar
By MattRed
11th Jun 2020 11:15

Glad I made you laugh!

Thanks (0)
avatar
By frankfx
11th Jun 2020 12:15

Why the absence of dividend paperwork?

Have you checked companies house?

Has she received annual accounts.?

Is she able to pay the tax on £85000 plus salary?

For which little cash has come her way.

To whom should these questions be addressed, to obtain legitimate answers?

Fraud Risk ?

If I was the accountant acting for the business and 51% shareholder sole director I am certain that I would have ensured that the partner 49% shareholder was FULLY informed.

Did/ does that accountant also act for the 49% er ?

Malodorous intent may be erupting here.

Controlling behaviour? It happens, do not be blind- sided !!

One for a lawyer perhaps .

Keep us in the loop please . the 51% er may come up smelling of Roses.

Thanks (0)
avatar
By Truthsayer
11th Jun 2020 12:39

I think the best advice is for you to leave this alone. Leave this matter in the hands of her solicitor and accountant.

Thanks (0)
Replying to Truthsayer:
avatar
By Tax Dragon
11th Jun 2020 12:41

Agreed.

Thanks (0)
Replying to Truthsayer:
By ireallyshouldknowthisbut
11th Jun 2020 13:30

Quite, @OP, whilst you may think you are helping a friend, I would not help your friends filling in tax returns.

Leave it to the professionals, just be supportive and supply cake.

Thanks (0)
Replying to ireallyshouldknowthisbut:
avatar
By Tax Dragon
11th Jun 2020 15:20

I am no lawyer, but if she submitted a tax return showing she was not entitled to the dividends (as per Vowles), I doubt it would help any claim she might have to the money. So it is the last course of action she should consider.

@OP, as ireally (and others) have urged you, do not get involved (other than as a friend), you do not know what damage you might do.

Thanks (1)
My photo
By Matrix
11th Jun 2020 13:49

What has been happening since they split? Has he bought the shares back or is the company still declaring dividends and not paying them to her?

The ex partner can’t have it both ways, he either gives her the missing cash for the dividends on which tax falls due or he offers an amount to buy the shares.

I suggest that she engages her own accountant. Did she approve this tax return before it was submitted?

Thanks (0)
avatar
By Calculatorboy
11th Jun 2020 20:44

This is a legal issue

This is an accountancy forum

You wouldn't post an accountancy question in a legal forum

...or would you?

Thanks (1)
Share this content