Dividends

[Zoiderman]

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.

Don't knock it until you try it; I spoke to the tax people about this, after receiving contradictory advice from accountants. This was from them, verbatim. Not advised, but perfectly legal.

[russell]

I would avoid going down the route of taking profits out of tax money, been there done that, then had to reduce them to get back in front. If the tax man asked for everything owed to him right now, you should have that in the bank plus more if possible. I plan to have all current owed tax and 6 months normal salary.dividend.

[Nixon Williams]

If your company/accountant produces management accounts (like we do), ie interim financial statements showing the profit earned to date, then it is perfectly ok to declare a dividend based upon these statements.

The statements should show profit and the corporation tax accrual, so clearly showing what is available for dividends.

Of course as a responsible director, you should reserve some funds for unseen eventualities etc and ensure that the dividend is properly declared, this is a common problem area that we, dividends incorrectly or not even declared.

I would strongly advise against using funds reserved for taxes, to pay a dividend, I think without exception when I have seen this, the company/director spirals into debt.

Alan