Overpaid dividends already reported on SA

Director dividends overpaid and repaid but already reported on self assessment

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I have recently taken on a client who has a year end of 30th April. He had overpaid himself divideds up until the end of March 16 which were then repaid in April 16 (and as such, his accounts show the lower amount). However his previous accountant has produced his self assessment showing the actual dividends paid which are significantly more than what he should have taken. I understand that the correct process would be to treat the overpayment as a director loan but the self assessment has already been done.

I feel tempted to reduce the following year dividend to account for the money being returned but the problem is the tax advantage this generates due to the change in dividend tax.

Should I accept that this is a genuine error and reduce the dividends on the 16/17 tax return or should I go through the hassle or resubmitting the 15/16 tax return?

Grateful for any advice on this.

 

Replies (7)

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By Matrix
07th Jul 2017 20:16

The accountant completed the tax return correctly with the actual dividends received rather than the dividends he should have taken.

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By Paddy_H
07th Jul 2017 22:16

^agreed.. You can't undeclare and repay a dividend.

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By johngroganjga
07th Jul 2017 22:29

I agree. Nothing needs correcting or resubmitting.

In the 2017 accounts you need to credit the cash introduced in April 2016 to the DLA, and then move on.

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By annabella83
07th Jul 2017 22:30

I should have mentioned this to start with but the company did not have enough distributable profit to pay the dividend making it an illegal dividend. I think the overpaid dividend should therefore be treated as director loan.

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By Tim Vane
08th Jul 2017 04:09

Why did you ask for advice if you are just going to ignore it and do the opposite?

A bald cat is still a cat, however wrong it may look. And if the director authorised and paid himself a dividend, then a dividend it was, regardless of its legality. You cannot rewrite history, so stop trying. And if you ask a question and three people all give you the same advice, consider taking it.

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By annabella83
08th Jul 2017 07:22

This is the advice I was hoping to receive and I'm grateful for your input. I was just a little concerned that I had left out a bit of very important information in my first post.

Thank you everyone

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By andy.partridge
08th Jul 2017 11:29

Isn't the fundamental advice not to take advice from strangers on an internet forum? I'm sure I've read it here many times.

So long as you are sure the dividends were dividends, I agree with the others. Often we hear that withdrawals treated as dividends were never really dividends at all.

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