More on Dividends

[Peoplesoft bloke]

I had an interesting conversation with my accountant. I have my own LtdCo and am as sure as I can be that I'm not caught by IR35.

He strongly advised me to pay salary of no more than 450 a month and anything else in dividends. He went on to say that it wasn't necessary to minute the divis and issue vouchers on the basis of "what's the worst that could happen if I don't"

Given all the advice I've seen on here, I regard this as risky to say the least....

[oracleslave]

I had an interesting conversation with my accountant. I have my own LtdCo and am as sure as I can be that I'm not caught by IR35.

He strongly advised me to pay salary of no more than 450 a month and anything else in dividends. He went on to say that it wasn't necessary to minute the divis and issue vouchers on the basis of "what's the worst that could happen if I don't"

Given all the advice I've seen on here, I regard this as risky to say the least....

This seems to contradict the advice SJD have given me that is along the lines of "due to the increase in the minimum wage legislation" please pay yourself salary of (I can't remember the exact figure but it's around £900)

I also don't agree with not minuting the dividends.

[themistry]

get a new accountant...

oh my god

TM

[Chugnut]

Since it's very little effort to actually minute the divs and a legal requirement according to my accountants, why not bother doing it?

The only contentious and frequently debated aspect of this post is the very low salary level, not the recording of the divs.

Your accountant sounds like a weapon.

[ASB]

"what's the worst that could happen if I don't"

Well, HMIT decides that since the dividends are not minuted they were not in fact dividends but just random drawings. They are then due PAYE and NI and penalties and interest on the shortfall. The accounts for all those years need to be restated and resubmitted, the CT calcs all need to be redone. It's quite a long list.

But is that actually likely to happen ?

No. When investigated HMIT made no requests for the minute book etc, never queried the validity of any dividends paid - save for verifying net shareholders funds were not negative. I imagine if HMIT did request the minutes they would probably be discovered anyway. :-)

But, the fact remains that they can do all the above.

[VectraMan]

Minutes are just signing and dating a piece of paper. Not sure why you wouldn't bother.

[dude69]

No. When investigated HMIT made no requests for the minute book etc, never queried the validity of any dividends paid - save for verifying net shareholders funds were not negative. I imagine if HMIT did request the minutes they would probably be discovered anyway. :-)

But, the fact remains that they can do all the above.

Exactly. When HMRC come knocking, you fill out the dividend forms then.

[xoggoth]

I have also had the same advice from more than one accountant, "oh we'll just fill those in later" AFAIK there is actually no legal requirement to minute dividends. The more important bit is the tax voucher, but assuming you date it, that is a proper record anyway, you could always sign it if it makes you feel happier.

Also if timing of divi is relevant to higher tax, eg you pay yourself to max just before 5th April, may be best to make sure the actual payment appears in bank statement at right time just in case they query if it was really paid when you said.

[Alan @ BroomeAffinity]

Whether there is no legal requirement to minute dividends is irrelevant, IMHO.

HMRC take a view that if your books aren;t in the best of order then your attitude to tax paying in general may be a bit lax. Therefore, if you don't have the appropriate paperwork for the dividends (IMO: appropriate paperwork is Dividend Declaration Minute and Dividend Voucher) then they will take a closer look.

Also, as has been stated, if the paperwork is not in order, then HMRC can deem that the divi payments are actually untaxed salary payments and thats best avoided.

I don't see what the issue is anyway: How long is it going to take to do the paperwork? 5 minutes at most, so why not just do it regardless of the legal requirement.

Don't think the OP's accountant is giving best advice either.

[ASB]

HMRC take a view that if your books aren;t in the best of order then your attitude to tax paying in general may be a bit lax. Therefore, if you don't have the appropriate paperwork for the dividends (IMO: appropriate paperwork is Dividend Declaration Minute and Dividend Voucher) then they will take a closer look.

Couldn't agree more. When the requirement for all LTDs to have an audit was dropped in the distant past we moved a couple of years later to a bookkeeping service. Audits were expensive things so we saved a good few hundred quid. The service we used made a complete arse of it and the accounts they filed didn't add up. It was our lucky year to get the quick check. This then turned into a full investigation lasting about 3 years. There were some issues over unpaid taxes - mainly due to some claims that were optimistic at best - e.g. rent a room scheme for the company office . About 3 grand of fees etc later it was all resolved but it wasn't a lot of fun.