newbie alert ;)

[Bradley]

Re: Dividends

It's a common mistake to believe that you can't pay frequent dividends. As long as you get the documentation right you can pay yourself as frequently as you like, every day even.

What you have to do is set up the company in such a way that the Directors can declare dividends.

Just because some Revenue troll doesn't like it doesn't mean its wrong!!

[4Contractors]

Re: Dividends

It's not wrong to declare dividends on a monthly basis but IMO you may be asking for trouble.

I personally pay myself a quarterly dividend, as advised by the accountant.

Having said that low salaries are probably also asking for trouble and I pay myself a low salary - well there is money at stake on that one

[partimer]

Re: Dividends

Guys,

I think you misread what I was saying:

>who take dividends every month have ran into IR

I was implying that the IR take a dim view of people who treat dividends like a monthly salary.

That's not saying you can't do it, (same as you can take a low salary). I saying from the people I know, the IR has mainly given grief to people who make a monthly dividend citing it as salary. (I would lean towards the IR on this point since I don't think many large businesses do this)

In another thread I've said that you can run your business as you see fit. (Not saying it's right or wrong)

However I would try as hard as possible not to appear on any IR radar for a long a time as possible. IMO monthly dividends and low salary attracts unwanted IR attention.

All a gamble and we'll all eventually get a visit from the IR but I'm trying to delay it as long as possible.

Hope that clears it up.

[4Contractors]

Re: Dividends

I definately agree with you partimer - as I said in my post it is likely that both paying frequent dividends and a low salary may well make a contractor more vulnerable to IR inspection.

Just making the point that there is no loss of income by reducing the frequency of dividends. Increasing the salary however, will cost you a lot in extra tax.

[partimer]

Re: Dividends

>there is no loss of income by reducing the frequency of dividends

Totally agree with you.

That's why I couldn't understand why somebody would want to highlight to the IR about a monthly dividend (when the IR could say you are treating it like a monthly salary) but if the Ltd delay taking a dividend by a few months, the IR would have no come back.

You've loss nothing except a possible gripe from the IR and a few months to think how to spend the money

Obviously, it's up to the director to run their business the way they see fit.

[Simon SJDaccountancy]

Re: Dividends

In the past 10 years we have dealt with over 4000 clients, and never have the Revenue questioned monthly dividends. There also appears to be no correlation between declaring a low salary and having a Revenue investigation.

[planetit]

Re: Dividends

How would the IR even know that you were declaring monthly dividends, unless they had already started an investigation?

[fiddleabout]

Re: Dividends

Not having to complete my annual return leaves me at a slight disadvantage on this one but iirc there is no mention on it of frequency anyway - just the total. So I'd agree with SJD (just as well I guess - he does it for a living) that there should be no correlation.

What I would ponder over is what it looks like if there actually is an investigation.

My personal tack is to pay a low but not minimum wage salary and around 3 divvis a year. What it really comes down to is whether or not you need the divvis to live on and/or whether you can get significantly more return by investing the money personally rather than leaving it in the company and getting the rather modest interest most banks pay.

[partimer]

Re: Dividends

In a span of 10 years (which I'm sure many of us fall into easily) I would be amazed if you don't get at least one visit from the IR.

I would love to know who's never had a visit in a decade (or more).

I'm not disputing how you should run your buisness. I know the IR have no brains but to me it's common sense that tells me:

a) X Ltd pays minimum wage but takes monthly dividend to top up their income

b) Y Ltd pays 14k PA and takes quarterly dividend.

I know the IR should treat both Ltd the same but IMO and think X Ltd would get a good "looking" over by the IR.

Just my opinion. I don't want the IR to reinterpret another obscure rule and end up like that S660a couple.