Barclays have f*cked up...help required

[Ketchup]

Hello,

I previously had a standing order to pay myself a divi from business account into a personal account of £2500 a month. I phoned barclays to cancel the standing order a few months ago and assumed all was fine. Checked my bank last night and the standing order had not been cancelled, i had effectively paid myself £2500 in additional dividends for the past 3 months. I have tried to get hold of my accountant, but he is on paternity leave. Does anyone know what i need to do to rectify this (other than pay the money back). Barclays have acknowledged it was their mistake and compensated me what they think it is worth (£125!!!!) and i have asked them to confirm in writing it was their mistake.

[ChimpMaster]

Hello,

I previously had a standing order to pay myself a divi from business account into a personal account of £2500 a month. I phoned barclays to cancel the standing order a few months ago and assumed all was fine. Checked my bank last night and the standing order had not been cancelled, i had effectively paid myself £2500 in additional dividends for the past 3 months. I have tried to get hold of my accountant, but he is on paternity leave. Does anyone know what i need to do to rectify this (other than pay the money back). Barclays have acknowledged it was their mistake and compensated me what they think it is worth (£125!!!!) and i have asked them to confirm in writing it was their mistake.

I'm quite sure you'll be able to treat this as a loan from your company, so just pay it back. Your acccountant can tell you how much interest to pay into your Ltd based on a 4% annual rate, and certainly it'll be less than the £125 compensation you have received.

[Craig@Clarity]

Simply pay the money back and put it down as repaying the company for dividends incorrectly paid. There shouldn't be any tax consequence as it sounds like it was a genuine error. So the money paid out should be classified as dividends paid and the money reimbursed back to the company as dividends repaid.

[Ketchup]

Thank you for the quick responses. Do i need to pay interest on the repaid dividend as it totals £7.5k (over the £5k limit for directors loan)

[Sally@InTouch]

I'm wincing at the standing order payment each month. Dividends are a reward for your investment from the profit, best varied the amount a little if possible. They could look like a disguised salary in my humble opinion.

[Craig@Clarity]

Thank you for the quick responses. Do i need to pay interest on the repaid dividend as it totals £7.5k (over the £5k limit for directors loan)

Not if it is treated as divi's. You will if it is a loan.

[ChimpMaster]

Simply pay the money back and put it down as repaying the company for dividends incorrectly paid. There shouldn't be any tax consequence as it sounds like it was a genuine error. So the money paid out should be classified as dividends paid and the money reimbursed back to the company as dividends repaid.

Simple as that, really? What about my loan question the other day: if I needed to take out a random amount, say £20,000, why wouldn't I just take it out and repay it 6 months later but without interest, i.e. because it was a 'mistake', a fat-finger slip perhaps, that I didn't notice for several months?

Just wondering is all....

[Platypus]

Where's NLUK when you need him? Let me step in!

A standing order, to pay a dividend, same amount every month ...

[Ketchup]

I'm wincing at the standing order payment each month. Dividends are a reward for your investment from the profit, best varied the amount a little if possible. They could look like a disguised salary in my humble opinion.

Is that a really bad idea then? Think i need a new accountant!

[ChimpMaster]

Is that a really bad idea then? Think i need a new accountant!

With all due respect: you need to DYOR if you're going to run your own business.