Max Dividend and bank transfer

[ittony]

I'm in this position now. I was expecting a payment yesterday (31st March), but I've had to chase and now it's Friday 1st and BACS takes 3 working days so having the cash before 5th April will be a close run thing even if paid today.

I could legitimately declare a dividend based on the amount that's invoiced before 5th April, but if I don't transfer the cash until 7th April, which year will it count as? What if I write a cheque on the 4th April, post it to myself, then take a couple of days before I can get to the bank, then pay it in knowing it'll take 3 days to clear...

The alternative is to raid the tax money to pay the dividend, and if things do go wrong and the payment never arrives I can always call that a loan and tear up the dividend declaration and no-one will ever know. But I'd rather not resort to that sort of skullduggery.

Suggestions? Better to declare the dividend in advance and wait to pay, but not if it's going to come back and bite me.

I'm in a similar position on this thread: http://forums.contractoruk.com/accou...ut-profit.html, and from what I found here: https://www.pcg.org.uk/cms/index.php...rticle&id=7605 it seems there's no problem "raiding the tax money" as long as you're sure you'll be getting those invoices paid. If despite your reasonable expectations they weren't paid, presumably you could loan the money to your company to pay the tax with. That's my reading of it anyway. Interested to know if anyone thinks otherwise, because that's exactly what I'm about to do.

[VectraMan]

Well you might we waiting for payment of an invoice at the start of the month and be worried you could miss by 1 day due to payments taking time to go through in many cases. You might even have a cheque to deposit or something.

Bump.

I'm in this position now. I was expecting a payment yesterday (31st March), but I've had to chase and now it's Friday 1st and BACS takes 3 working days so having the cash before 5th April will be a close run thing even if paid today.

I could legitimately declare a dividend based on the amount that's invoiced before 5th April, but if I don't transfer the cash until 7th April, which year will it count as? What if I write a cheque on the 4th April, post it to myself, then take a couple of days before I can get to the bank, then pay it in knowing it'll take 3 days to clear...

The alternative is to raid the tax money to pay the dividend, and if things do go wrong and the payment never arrives I can always call that a loan and tear up the dividend declaration and no-one will ever know. But I'd rather not resort to that sort of skullduggery.

Suggestions? Better to declare the dividend in advance and wait to pay, but not if it's going to come back and bite me.

[d000hg]

Question is why would you want to withdraw it after April?

Is it because you do not have the funds are are waiting to be paid again and in that case you could argue you do not have the profits in the last year to pay it so you are withdrawing it from profits in the next year.

If the money is there why bugger about and just withdraw it now?

Well you might we waiting for payment of an invoice at the start of the month and be worried you could miss by 1 day due to payments taking time to go through in many cases. You might even have a cheque to deposit or something.

[ASB]

According to this guide it is the Declared date for Final and Paid date for Interim dividends:



I assume if no dividends were declared as part of the annual accounts, they will all be "Interim" and therefore it is the Paid date that counts.

Yes, but transfer to Directors Loan Account = absolute right to the funds = constructive payment. Thus the cash doesn't actually have to end in the shareholders current account. However it has been the subject of some discussion: e.g.

interim dividends

[TykeMerc]

Yep I don't have any problem with that. I just want to make sure I am ok to withdraw after the financial year and that my accountant knows best in this case...

Ok, assuming you've got profits to draw a dividend from, enough headroom to stay in the tax band you prefer and have done the necessary meeting and dividend voucher, why not just pay the dividend cash now rather than wait? I admit I'm confused.

Admittedly I don't actually count a profit as a profit (so worth considering for dividend purposes) until the cash has been paid over to my business account from the client.

[NorthWestPerm2Contr]

Of course not forgetting that you should only declare a dividend from profits.

Yep I don't have any problem with that. I just want to make sure I am ok to withdraw after the financial year and that my accountant knows best in this case...

[northernladuk]

Question is why would you want to withdraw it after April?

Is it because you do not have the funds are are waiting to be paid again and in that case you could argue you do not have the profits in the last year to pay it so you are withdrawing it from profits in the next year.

If the money is there why bugger about and just withdraw it now?

Is it because you want to see how your account balances up first to see what is left? In that case you need to tidy your accounting up so you are aware exactly how much you have.

If you do overpay dividends and break in to the 25% you could count the over payment as a directors loan and just make sure you pay it back within 9 months.

[Lumiere]

According to this guide it is the Declared date for Final and Paid date for Interim dividends:

When are dividends taxed for UK companies?

Dividends from UK resident companies are taxed when they are “paid”. HMRC says that the date of payment should have its company law meaning.

* For company law purposes dividends are treated as paid on the date when an enforceable debt is created and where there is no such debt, the date of payment.
* The declaration of an interim dividend becomes taxable when it is actually paid.
* A final dividend becomes an enforceable debt when it is approved by company resolution.

To ensure that the taxable date for a dividend is before 6 April 2010, it is necessary to ensure payment of an interim dividend is made before that date. For a final dividend it is necessary to make sure the resolution approving the payment of a dividend on a date before 6 April 2010 is passed before that date.

I assume if no dividends were declared as part of the annual accounts, they will all be "Interim" and therefore it is the Paid date that counts.

[TykeMerc]

Of course not forgetting that you should only declare a dividend from profits.

[NorthWestPerm2Contr]

Write some meeting minutes and declare a dividend before 6th April.

Meeting with myself declared.

[doodab]

How do you declare it prior to 06/04?

Write some meeting minutes and declare a dividend before 6th April.

[NorthWestPerm2Contr]

As long as the dividend is declared prior to 06/04 and the paperwork dated appropriately you're fine to withdraw it after that date. The dividend will still go on your 10/11 tax return.

How do you declare it prior to 06/04?

[Clare@InTouch]

As long as the dividend is declared prior to 06/04 and the paperwork dated appropriately you're fine to withdraw it after that date. The dividend will still go on your 10/11 tax return.

[NorthWestPerm2Contr]

I spoke with my accountant yesterday regarding withdrawing the maximum allowance before the 6th April. He said that dividend is just a matter of declaration and that I could withdraw it after the 6th April but it could be counted within this tax year. He suggested I keep a good amount of cash in the account just to cover any potential errors or tax requirements. Has anybody else heard this and am I ok to not physically withdraw the amount until after 6th April?

Thanks