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What a mess!

Director taken way more than his percentagee in dividens

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I am in the middle of taking over a company and holding company from another accountant.  In the meantime I have been looking at Companies House filings and this years book-keeping.  It seems previous Accountant set up a holding company owning 80% of share in trading company.  This owned 100% by person A.  Now...the trading company is run mainly by one director but he has only 15% of shares.  Previous accountant did not explain about when you can take dividends and how much.  As he runs the company he thought he was entitled to what he liked ( within reason) and has been paying himself a small salary with weekly additions in what he thought were dividends.  (With nothing transferred to the holding company for their 80%) He was also under the assumption (from previous accountants) that he was entitled to 85% of the dividends.  Where this figure came from I don't know.  My problem is that I think this additional money should be called salary subject to PAYE as he is only entitled to 15% of what he has taken.  But...this has been going on since August 2018 hence the 2018/9 and 2019/20 PAYE submissions would be incorrect if I did that.  Any thoughts on what I should do?

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By lionofludesch
16th May 2020 13:06

They're not dividends, they're not salary, they must be Director's Loan repayments/advances.

Unless there's something else they might be.

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By jcace
16th May 2020 13:42

I presume that all shares are of the same class....

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