Estate - tax on dividends received years later

Estate how are dividends received many tax years later to be treated (complex estate yearly returns)

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So I am wondering in what tax year dividends received by an estate are taxed where there is a delay.

There may be a delay to realising a share or indeed at a later date an estate discovers a share holding that has been forgotten about or if there is a delay to receiving probate such that a few years dividends are rolled up and paid later.

Eg client dies 1/1/15 (with a complex estate so tax returns needed). Dividend payable say 30/3/15 doesnt get paid.

Say in 207/18 discover missing share and dividends and these are then reisssued. Do we have to amend the 2014/15 tax return or is dividend taxable when received?

Also often there may be a charge for issuing the late dividend payment - i assume this is just ignored and tax is paid on full dividend still.

 

 

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By penelope pitstop
09th Jun 2020 02:10

For "Complex Estates" dividends are taxed at the Estate income tax rate in the tax year the dividends were payable and disclosed in the tax return covering the due date.

The fact the the cash for the dividends has been sat in a bank account with the paying company for years is irrelevant. The original due date of payment fixes the tax point.

You will have to reopen any past complex Estate income tax returns and file these as appropriate with HMRC and pay any income tax, interest and penalties due.

Any charges for reissuing dividends do NOT reduce the related dividend for Estate income tax return purposes.

But they may possibly reduce the dividend for R185 beneficiary purposes. You may have to research this point. I would not know without doing any research first.

I have seen dividends discovered 10 years after the due date. But they are always related back to the tax year they were payable for complex Estate and personal tax purposes.

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Replying to penelope pitstop:
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By Justin Bryant
09th Jun 2020 18:57

That would result in an interesting tax loophole as if the (final) dividend cheque was physically paid 10 years late and banked today, it is not taxable in this tax year but in the tax year 10 years ago, which cannot be amended if it was not taxed then (there is no obvious deliberate failure re a 20 year DA either). Indeed, such payment delays are discussed at para 280 here:

http://financeandtax.decisions.tribunals.gov.uk//judgmentfiles/j11660/TC...

If it's an interim dividend then the loophole does not arise as that's only taxable when physically paid.

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