Accountant advice - Vary dividend payment

[northernladuk]

I do agree here, in that it's a situation borne out of just not thinking and acting right.

Check me out being the voice of reason and not being rude to anyone..... you bellend.

[NotAllThere]

If you pay dividends monthly, HMRC may try to claim it's salary.

Back in the 1990's, I took a quarterly dividend. The rest was minimum pay, plus a loan that was paid off by the dividend. Nowadays, I'd do the minimum pay and a yearly dividend. Really, it's not difficult. Do not draw attention to yourself.

[eek]

There is no evidence that regular dividend payments of exact amounts are a problem. First, the dividend frequency and amounts would only become apparent under investigation (only the total amount is reported in your SATR). Second, a legal dividend is a legal dividend. It is simply wrong to think that dividends are going to be reclassified as income purely on the basis of amount and frequency when they have been legally declared and there is case law to prove it. In short, providing you have the correct paperwork, it is a non-issue.

That said, I don't take regular dividends myself because, well, why bother with the faff?

It's worth saying that HMRC have access to far more information than people think. They were talking about big data and direct access to bank account details back in 2013...

[jamesbrown]

It's worth saying that HMRC have access to far more information than people think. They were talking about big data and direct access to bank account details back in 2013...

Talking doesn’t mean much, does it?

AFAIK, access to bank transactions would require a third party notice agreed by the taxpayer or approved by a tax tribunal so you’d already be under investigation. Even the argument that they might look more closely at you if you’re under investigation for other reasons seems incredibly weak and speculative to me - there are plenty of IR35 investigations that start for unrelated reasons and dividend frequency is not going to be a factor.

Anyway, their access to information is a sideshow. There is nothing wrong with legal dividends of any frequency and amount and there is case law to support that, so HMRC can argue whatever they want (and will lose, if the paperwork is all correct).

[malvolio]

Talking doesn’t mean much, does it?

AFAIK, access to bank transactions would require a third party notice agreed by the taxpayer or approved by a tax tribunal so you’d already be under investigation. Even the argument that they might look more closely at you if you’re under investigation for other reasons seems incredibly weak and speculative to me - there are plenty of IR35 investigations that start for unrelated reasons and dividend frequency is not going to be a factor.

Anyway, their access to information is a sideshow. There is nothing wrong with legal dividends of any frequency and amount and there is case law to support that, so HMRC can argue whatever they want (and will lose, if the paperwork is all correct).

Whatever. Go research HMRC's investment in iXBRL. They don't need bank data.

[eek]

Talking doesn’t mean much, does it?

AFAIK, access to bank transactions would require a third party notice agreed by the taxpayer or approved by a tax tribunal so you’d already be under investigation. Even the argument that they might look more closely at you if you’re under investigation for other reasons seems incredibly weak and speculative to me - there are plenty of IR35 investigations that start for unrelated reasons and dividend frequency is not going to be a factor.

Anyway, their access to information is a sideshow. There is nothing wrong with legal dividends of any frequency and amount and there is case law to support that, so HMRC can argue whatever they want (and will lose, if the paperwork is all correct).

ever heard of Connect?

[jamesbrown]

Whatever. Go research HMRC's investment in iXBRL. They don't need bank data.

Whatever.

As I said, access to information is completely irrelevant here.

This is one of the (many) old wives' tales shared among ill-informed contractors.

It starts with a grain of truth (that employment income should not be disguised as dividend income), but it has somehow been massively over-simplified into "if it has the same consistency as employment income, then it must be income from employment". It's palpable nonsense, as evidenced by case law.

[eek]

Whatever.

As I said, access to information is completely irrelevant here.

This is one of the (many) old wives' tales shared among ill-informed contractors.

It starts with a grain of truth (that employment income should not be disguised as dividend income), but it has somehow been massively over-simplified into "if it has the same consistency as employment income, then it must be income from employment". It's palpable nonsense, as evidenced by case law.

So give me the actual case law (i.e. HMRC v xyz)?

[eek]

Oh How many interim dividends are OK for very small Ltd Co | AccountingWEB especially cfield's post at the end and Page not found | AccountingWEB

although if you are using freeagent or something you will have real time accounts allowing you to calculate the available profit so even that post isn't so relevant as it was a few years ago.

[jamesbrown]

So give me the actual cases?

For example, Richard and Julie Jones v HMRC [2014] TC04171. If a dividend has been properly declared, history cannot be rewritten.

Now give me an actual case that supports your argument.