Dividends

[Savvy]

Hi

Just submitting return to tax office, does it matter that the retained profit is less than tax owed or is this ok?

Thanks

[topper]

Given retained profit is AFTER CT\PAYE\NI and all other taxes due, then providing you pay Hector what's due there won't be an issue, there maybe an issue with regards your war chest and being on the bench though!!

Think your thread title needs to be a bit more descriptive and accurate though!

[Gonzo]

Hi

Just submitting return to tax office, does it matter that the retained profit is less than tax owed or is this ok?

Thanks

If the retained profit is less than the tax owed that is not a problem.

If your question is really about whether or not it is OK that the retained funds plus outstanding debtors is less than the tax owed then that is a different matter. That would technically make your company insolvent.

[northernladuk]

It also means you could have a problem with your dividends. You can only pay dividends from profit.

[Greg@CapitalCity]

Just submitting return to tax office, does it matter that the retained profit is less than tax owed or is this ok?

Its OK.

[psychocandy]

Hi

Just submitting return to tax office, does it matter that the retained profit is less than tax owed or is this ok?

Thanks

WTF....

Retained profit is dosh left AFTER tax owed so unless this is negative you've got enough to pay CT!!!!!

[Danielsjdaccountancy]

Hi

Just submitting return to tax office, does it matter that the retained profit is less than tax owed or is this ok?

Thanks

No problem at all, as previously mentioned, retained profit is after corporation tax, so where you take your dividends from.

[Zoiderman]

It also means you could have a problem with your dividends. You can only pay dividends from profit.

I am led to believe, that you can take dividends on projected profits; you don't actually have to have them e.g. if you have a 12 month contract paying x, then it is ok to drag down profit on what you will be earning in the next 12 months.

Thats what I was told

[northernladuk]

I am led to believe, that you can take dividends on projected profits; you don't actually have to have them e.g. if you have a 12 month contract paying x, then it is ok to drag down profit on what you will be earning in the next 12 months.

Thats what I was told

And your profits don't materalise and you have spent the tax mans money and no way to make it back. Yer, I can see the tax man being happy with that.

12 month contract paying x != you will get it.

[ASB]

I am led to believe, that you can take dividends on projected profits; you don't actually have to have them e.g. if you have a 12 month contract paying x, then it is ok to drag down profit on what you will be earning in the next 12 months.

Thats what I was told

What constitutes distributable reserves can be complex. One of the accountants kindly posted the relevant guidance.

In the case you mention I think it would be difficult to book those profits. Though I think its pretty safe to include things that have been invoiced - provided there is a reasonable expectation of the debt being settled. Taking anything forward is tricky, in the event your expectations are not met it can lead to having to do as certain amount of explaining.