Dividend tax 25% on self assessment - can i move it to another year ?

[ContractJo]

Hi
I'm just completing my Self Assessment for 11/12 and have fallen foul of the 25% tax on dividends - didn't realise it existed. So part of the year was PAYE and earned around 40k but then earned 30k+ dividends - ouch!!

The year end accounts were submitted just after year end 31/1 to Co's House and corp tax return done and paid to HMRC.

At this point can I say that any of the dividends were paid in the new tax year 12/13 as I've earnt zilch so far this year due to different circumstances

I suspect i'm gonna have to bite the bullet and pay the 25% of the £30k but figured it's worth asking the experts first!

J

[Project Monkey]

Hi
I'm just completing my Self Assessment for 11/12 and have fallen foul of the 25% tax on dividends - didn't realise it existed. So part of the year was PAYE and earned around 40k but then earned 30k+ dividends - ouch!!

The year end accounts were submitted just after year end 31/1 to Co's House and corp tax return done and paid to HMRC.

At this point can I say that any of the dividends were paid in the new tax year 12/13 as I've earnt zilch so far this year due to different circumstances

I suspect i'm gonna have to bite the bullet and pay the 25% of the £30k but figured it's worth asking the experts first!

J

You could say that, but I suspect it wouldn't be true and I think telling deliberate falsehoods to HMRC might be against the law.

That said, no you can’t transfer your tax liability from one year to another.

[Jessica@WhiteFieldTax]

Complicated...

Depends whether it was a interim dividend, which is deemed to be "paid" when approved by directors or actually paid to shareholder or credited to directors account (i.e date of bookkeeping entry) or a final dividend which is deemed "paid" on the date it is approved by directors /signing accounts off.

CTM20095 - ACT: General: Notes on company law aspects of dividends

is the official guidance on it.

The only dividend dispute I've ever worked with HMRC focused on this issue, HMRC wanting to move dividends from accounts to 31.3.01 from 00/01 tax year to 01/02 tax year based on date of approval of the accounts; I.e. what you are trying to achieve.

So, it is possible, but depends on paper trail.

[northernladuk]

Wouldn't you be putting yourself at risk of an inspection by changing your details in your favour at such a late stage?

Who said accountants don't pay for themselves....

[Jessica@WhiteFieldTax]

Who said accountants don't pay for themselves....

I couldn't possibly comment

[Sockpuppet]

I did this...well had it happen to me.

Had to pay myself a £5k dividend to make sure my DLC was in credit just before company year end. Promptly forgot about this.

Working out my year end dividends to be tax efficient I effectively paid myself £5k over. Now I could go back (especially as company accounts have not been submitted) and say "well that £31k dividend at April 4th was actually £26k i just typed it in wrong" and do a credit but as Sage will record me doing that I've taken it on the chin.

If HMRC ever investigate it'll be bob obvious what I've done and I've got to pay the tax sooner or later and its not the end of the world.

[Wanderer]

At this point can I say that any of the dividends were paid in the new tax year 12/13 as I've earnt zilch so far this year due to different circumstances

No you can't but are you sure it was legally a dividend you took? Did you do the dividend vouchers and meeting minutes paper work properly when you drew money from your company?

If you didn't do the proper paperwork then it may be that you actually took was a director's loan. If this is the case, then you may be able to account for the drawings as a director's loan and pay the loan off in the current tax year by declaring a dividend (with proper paperwork) some time after 6th April 2012 which is credited against your director's loan account balance.

You will have to pay your company interest on the director's loan at the statutory rate (currently 4%) so you avoid a BIK on the beneficial loan but that interest payment becomes company income so it can be paid straight back to you as a dividend minus 20% corporation tax so the net cost of the director's loan is 1% APR

It's a fairly aggressive move to make and you need to tread very carefully here because in the event of an investigation HMRC will be suspicious that the director did actually declare and take a dividend and then later "lost" the minutes/dividend vouchers so they could restate it as a director's loan in order to shift the dividend and resultant tax liability to another tax year. Do not be tempted to do "lose" paperwork like this - you will get into a lot of trouble if HMRC find evidence of that and you get caught.

[ContractJo]

I did this...well had it happen to me.

Had to pay myself a £5k dividend to make sure my DLC was in credit just before company year end. Promptly forgot about this.

Working out my year end dividends to be tax efficient I effectively paid myself £5k over. Now I could go back (especially as company accounts have not been submitted) and say "well that £31k dividend at April 4th was actually £26k i just typed it in wrong" and do a credit but as Sage will record me doing that I've taken it on the chin.

If HMRC ever investigate it'll be bob obvious what I've done and I've got to pay the tax sooner or later and its not the end of the world.

Thanks all for your advice ..... my accounts have been submitted as year end was 31.1.12 - so guess that doesn't help ?

[LisaContractorUmbrella]

Thanks all for your advice ..... my accounts have been submitted as year end was 31.1.12 - so guess that doesn't help ?

Do you have an accountant ContractJo?

[northernladuk]

Do you have an accountant ContractJo?

Get your own bleedin line!!!