Dividend dates

Dividend dates

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Are you able to agree a dividend at a board meeting and back date the payment to a previous period on the basis that say the a 15k dividend was agreed for the year say to 31st March 2013 and the accounts were signed of in say September 2013 showing the back dated dividend in the accounts to March 2013.

A client has taken payments during the financial year which he wants to be treated as a dividend but has not completed the necessary paper work until after the year end. Can he back date the paperwork to reflect one voucher for a number of individual payments ?  

Any help would be appreciated

Replies (12)

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By User deleted
27th Jul 2014 00:07

On the recommendation of the directors, the shareholders could pass an ordinary resolution declaring dividends payable on or after a particular date. If the accounts were't yet finalised by then it should all be fine. However, s.1104 (CTA/10) does require that a tax certificate be issued within a reasonable time. So, if the paperwork isn't proper (particularly where outside shareholders are involved) you would be providing ammunition to the taxman to argue that it was a loan to the participator (provided it is relevant to your case). 

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By johngroganjga
27th Jul 2014 08:54

You seem to be asking two separate questions.

To answer the first, if you have a March year end, a dividend voted in Sepember 2013 appears in the 2014 accounts not the 2013 accounts.

To answer the second question, if the payments during the year were unambiguously dividend payments (depending on the facts, that may be a big "if") then they are indeed dividends and should be accounted for as such. Any delay in producing dividend vouchers etc. can be remedied after the event.

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By thomas34
27th Jul 2014 12:23

Dividends

Yes, one voucher can cover several individual dividends, but it would be messy if they covered different tax years.

If the director/shareholder intended the payments to be dividends i.e. not remuneration or loans, then in my book they are dividends. Clearly there should have been sufficient reserves at the time of the payments to make them legal.

Without wishing to start a 100 post thread it's not for us to deem the payments to be loans just because the director failed to produce a voucher at the time.

Interim dividends can be decided upon by the directors without the need for a general meeting.

Producing a dividend warrant after the event is not "backdating", it's merely formalising a transaction which took place some time in the past - all book-keeping is by definition doing just that. Dating a transaction before it took place is backdating and likely fraudulent. 

 

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Replying to ireallyshouldknowthisbut:
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By User deleted
27th Jul 2014 16:00

Thanks for your responses.

I have a schedule of the dividends if I wanted to do one voucher (for each tax year) would I have to put down the individual amounts and what date would I use ?

 

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By johngroganjga
27th Jul 2014 16:43

What date?
The date of payment.

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By User deleted
27th Jul 2014 18:06

If there are different dates am I better doing a separate voucher for each payment ?

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By johngroganjga
28th Jul 2014 17:42

Doesn't matter really. Whatever you prefer. One voucher with all the payments and dates listed. Or separate ones for each payment.

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Replying to Bsuere:
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By User deleted
29th Jul 2014 20:34

dividend voucher

With multiple dividends and date on one voucher how would you deal with the board minutes ? If the company had two directors and the one with 60% control issued the dividend payments does the second director need to attend the board meeting ?

Any help would be appreciated

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By johngroganjga
29th Jul 2014 22:51

If the dividends have already been paid, the very payment evidences what they are. Unless the 40% shareholder is taking the position that the dividends should not have been paid (is he?) you don't need to waste time documenting past decisions.

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By KatherineF
01st Aug 2014 14:36


I'd like to ask a related question...

Once the year end accounts are finalised, and it is decided to pay a dividend from the remaining earnings for that year, should this dividend appear in the accounts for that year? It would obviously be decided on and paid in the following year.

And if it should appear, how should it be shown

Thanks

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By johngroganjga
01st Aug 2014 16:06

No it shouldn't appear.

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By paulwakefield1
01st Aug 2014 16:18

Agreed

However it should be disclosed in the notes to the accounts if it is declared before the accounts are approved.

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