Handling Dividends

[Demonwiz]

Handling Dividends

Why would you need shareholder meeting minutes for a dividend? Given its the Directors choice to declare a dividend wouldn't it be a directors meeting you would want minutes for??


Also, heres a strange one.......received an email from an 'accounting firm' who informed me that if your company only has 1 sole director then you don't nneed to draw up any directors meeting minutes.....hmmm doesn't sound safe to me.

Hi Guys,
I'm new to "posting" on Contractor UK, so a quick Hello to all out there from me.
I have been contracting for a mere 18 months and until recently was with a well known composite. I went on my own as a Ltd back in April. I read these forums with interest as I am keen to glean as much help staying on the right side of HMRC.

I too pay myself (as advised by my accountant) a low ish wage and a top up by dividend. I wish to declare the dividends correctly especially post Arctic Systems case went through the courts.

My accountant simply said "type out some minutes of a meeting to recommend the dividend payment" How exactly do you go about declaring a dividend in reality.

I have read that you "hold a board meeting" declare a dividend and minute the meeting for future "reference".

Is there a format that has to be adhered to to satisfy HMRC? .

Once I have the format set up is should be a fairly straight forward task to repeat the exercise monthly, quarterly etc!
Any help advice would be greatly appreciated.

Thanks

Demonwiz

[MrRobin]

My minutes say:

Minutes of the Board of Directors
Held at 1 High Street, Newtown, AZ1 1AB
On 30 July 2007
Present All Directors and the Company Secretary
The Chairman reported that the meeting had been called to consider a dividend for the year ending 31 March 2008
It was proposed that an interim dividend be declared as below:
Rate per share £12.00
Total Dividend Payable £1,200.00

After due and careful consideration had been given to the proposal, the meeting considered that the proposal was in the best interests of the company and it was resolved that the above dividend be distributed to the members.

There being no other business, the meeting was closed.

You can get templates from the wbe.. do a search or go to one of the websites of the popular accountants we talk about here (Nixon Williams or SJD)

Hope that helps.

[Gonzo]

Hi Guys,
I'm new to "posting" on Contractor UK, so a quick Hello to all out there from me.
I have been contracting for a mere 18 months and until recently was with a well known composite. I went on my own as a Ltd back in April. I read these forums with interest as I am keen to glean as much help staying on the right side of HMRC.

I too pay myself (as advised by my accountant) a low ish wage and a top up by dividend. I wish to declare the dividends correctly especially post Arctic Systems case went through the courts.

My accountant simply said "type out some minutes of a meeting to recommend the dividend payment" How exactly do you go about declaring a dividend in reality.

I have read that you "hold a board meeting" declare a dividend and minute the meeting for future "reference".

Is there a format that has to be adhered to to satisfy HMRC? .

Once I have the format set up is should be a fairly straight forward task to repeat the exercise monthly, quarterly etc!
Any help advice would be greatly appreciated.

Thanks

Demonwiz

I don't think that there is a specific format that you need to follow. What is important is that it is actually done at the time. Going back and retrospectively creating them is what can get you into trouble.

Mine just say something along the lines of "A meeting of the Directors was held at xxx on yyy date. It was proposed and resolved to pay a dividend to shareheholders of the amounts shown below." Then list the net dividend, the tax credit and the gross dividend. Then list each shareholding and the amounts paid for each one.

All that's left to do then is make the payment (or payments if you have more than one shareholder).

I think that should just about cover it. My thinking (and I don't know whether I am right on this or not) is that you just want to have some evidence that the payments made are in fact dividends and not other sorts of payments that HMRC might be interested in, like salary.

[Demonwiz]

Thanks MrRobin and Gonzo, I appreciate your time and effort. Sorry for my late reply ... trying too hard to please too many Kids, Wife, client, HMRC etc