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Recovering dividends

Recovering dividends

Company was formed and dividends paid to "B" share holder since company was formed. Company is now ceasing to trade and no profit has ever been made. Two questions;

1. Are HMRC likely to be interested in this when they are advised the company is being wound up and struck off?

2. Will Companies House / Crown solicitor be interested in this at all?

Any advice much appreciated.


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01st Mar 2011 13:24

Depends of course

If the company is insolvent the illegal dividends can be pursued on behalf of creditors.  If the company is solvent it is up to the company directors to decide whether to pursue the illegal sums.

Just a thought, I assume the recipient paid tax on the dividends, if so, recovering the illegal dividend should reduce their self assessment and enable a retrospective recovery of excess liability in the past 4 years - claim before 5 April to maximise this.


Anyone else any other thoughts?

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By PM2278
01st Mar 2011 13:33

Further complications!

The only creditor will be the director in respect of his loan account and he will not pursue recovery of the illegal dividends.

I am wondering now whether there will be an issue with HMRC trying to argue the dividends were actually salary as there were no profits there for them to be paid from.

If only clients listened at the outset!!!



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