Tax Liability on Dividend

[Clare@InTouch]

I certainly wouldn't recommend retrospectively allocating shares to your wife back in the 2009 tax year - HMRC are liable to pick up on it and your company records will not show that your wife held shares back then. Considering HMRC penalties are based on how honest you've been, you'd be looking at a fair amount of extra money on top of the original tax bill that is due.

You really need to simply prepare a 2007/08 tax return, declare the income, and pay the tax. Have you asked the accountant why he did things the way he did, and never prepared the 07/08 tax return in the first place?

[Matty0682]

Just to add......I have alreadt hit the upper tax threshold on my dividend for 08/09


thanks

[Matty0682]

Hi Folks....first time post so go easy on me

I have been contracting for the past two years through a Ltd Company and have been paying a tax accountant to deal with all my affairs. I have now discovered a problem with my accounts.

I started trading in April 2008 (Apr – Mar trading period) and trusted my accountant to structure my salary & dividends to maximise my personal income and lower my tax liability.

My turnover for 08/09 was 98k and my accountant paid advised me to pay a dividend over the year. This is where there I realised a problem…..he allocated dividend into 07/08 and left the remaining some in 08/09 (for my personal tax). I think he did this because my accountant had forgot that I had a perm job in 07/08 earning over 50k (higher tax payer). Therefore by thinking I wasn’t in work it was tax efficient to move this amount back. My accountant did my tax return for 08/09 and did not mention about a tax return for 07/08

So now I realise that I am potentially liable for tax and probably should complete a tax return for 07/08. I am very annoyed as I sent my accountant my p60 at the start for 07/08 showing I earned 50k in my previous job (so it looks like he lose this record). The accountant has just left the company, so this is why it was spotted.

I should have spotted this in my 08/09 tax return, as it only contained the half the dividend, not the full. But when you are paying a professional tax accountant, I assumed everything was in order and probably didn’t perform due diligence on my accounts he prepared for me.

Basically here is my question: is there anything I can do to mitigate this potential tax liability on the in 07/08?
I am currently the sole shareholder, so can my wife become a shareholder and I pay her a dividend in 08/09? (she has no income in 08/09)

Thanks for yr help