The number of directors taking illegal dividends or loans from their companies is on the increase, and it’s been triggered by the income tax increase, according to insolvency experts.
Data from the Insolvency Service shows that 2,169 directors of insolvent companies faced disqualification proceedings in the year to March 31 2010, up 17% from 1,852 the year before.
The temptation by directors and owners of businesses to pay themselves an abnormally large special dividend before the increase in the highest rate income tax band to 50% on April 6 2010 may have triggered the spate of illegal dividends, said Keith Stevens, a partner at Wilkins Kennedy.
“A couple of holiday homes, a taste for sports cars and an expensive divorce settlement will normally come with a big debt that...
About Gina Dyer
I've been a journalist for four years, writing on a wide variety of topics from business and finance to travel, culture and celebrities. I began my career as an editorial assistant for Palladian Publications, a B2B publisher specialising in technical magazines for professionals in primary industries. I later moved into consumer magazines as a staff writer for French Magazine, a monthly travel publication aimed at Francophiles, and was part of the launch team for The Traveller in France, a quarterly magazine produced for the French tourist board. I was also a regular contributor to online travel portal Homesworldwide.co.uk, and later worked with customer publishers Future Plus as a freelance production editor, before joining Sift Media in January 2009. I am currently Deputy Editor of AccountingWEB.co.uk.