Overpaid Dividend

[Sockpuppet]

What is the significance of the dividend being interim vs. final?

I believe its Interim = when you declare it is the tax date. Final = when you pay it out is the tax date. Then again I could be wrong.

[Contreras]

Was the dividend an interim or a final. It could make a difference to the payment date and consequent taxation date because of the way finals must be handled.

In the latter case the payment of the "dividend" could in fact simply have been a short term loan which was in fact repaid by the accounting entries when the final dividend was actually paid. Assuming the directors meeting and resolutions etc all happened and are appropriately minuted in the minute book.

What is the significance of the dividend being interim vs. final?

[Greg@CapitalCity]

Which is the point. Declaring it as a loan would mean amending the P11d.

Not necessarily. Either the loan is held for a short enough time that no interest is due (so no P11D reporting), or else the Director pays interest on the loan at a rate of 4% (also no P11D reporting required).

A P11D entry would only be required if (a) interest is due to be paid, AND (b) interest is paid at a lower rate than the HMRC prescribed rate (or not paid at all). This would be the least desirable position, and entirely avoidable.

[Sockpuppet]

In the latter case the payment of the "dividend" could in fact simply have been a short term loan which was in fact repaid by the accounting entries when the final dividend was actually paid. Assuming the directors meeting and resolutions etc all happened and are appropriately minuted in the minute book.

Which is the point. Declaring it as a loan would mean amending the P11d.

[ASB]

Was the dividend an interim or a final. It could make a difference to the payment date and consequent taxation date because of the way finals must be handled.

In the latter case the payment of the "dividend" could in fact simply have been a short term loan which was in fact repaid by the accounting entries when the final dividend was actually paid. Assuming the directors meeting and resolutions etc all happened and are appropriately minuted in the minute book.

At the risk of NLUKs (legitimate) wrath it is not uncommon for the minutes, whilst no doubt occurring contemporaneously to be occasionally mislaid temporarily.

[psychocandy]

Echo what others have said. You're personally getting a dividend from a limited company. If its income in the current tax year then its personal income for that tax year.

If you haven't actually paid the dividend out of the company bank account into your personal account, I dont see an issue.

OK, so maybe the dividend paperwork has been done etc. but can't you just loose it? Bit naughty maybe but, at the moment, the only ones who know said dividend ever even existed are you and your accountant surely?

Might be a bit more difficult if money has already been transferred though.

[northernladuk]

I think it must be... a tax year runs from the 6th

Doh!! Well pointed out.. meant ends on...

[kingcook]

I would advice you take a bit more care running your business as well. It isn't exactly a secret that tax years run from the 5th of April.

I think it must be... a tax year runs from the 6th

[northernladuk]

I would advice you take a bit more care running your business as well. It isn't exactly a secret that tax years run from the 5th of April.

[Greg@CapitalCity]

Sorry, I have nothing more useful to add to this thread over what Clare and Nathan have mentioned. It just bothers me that your accountant gave you that advice in the first place.....it reads to me like "I am too busy to care". Luckily Clare and Nathan aren't

[Clare@InTouch]

If you took a loan of £27,000 on 02/04/2012 then there won't be any benefit in kind for 2011/12 as it wasn't outstanding for long enough to generate any liability, therefore no P11D to file.

Agree with Nathan that a revised P11d does not necessarily mean HMRC will prick up their pointy little ears and investigate.

[Nathan SJD Accountancy]

Hi All,

My company tax year runs to 31 March. On the 2nd of April I figured it was a new year and paid myself a £27k dividend. My accountant has just advised me that this falls within the personal tax year which runs to 5 April.

Effectively I have overpaid my allowed dividends for the year by £27k.

Does anyone know if there is a way to reverse this transaction?

My accountant says if I change it to a Directors Loan she will need to resubmit my P11d which will alert HMRC and they will investigate my company.

Has anyone done this in the past? Did HMRC come knocking?

Thanks for your help.

Hmmm. Resubmitting a P11d doesn't automatically result in HMRC wanting to explore further.

A possibility (if you do not want HMRC around) is to charge interest on the loan until it is repaid in full (declaring a dividend, but not taking the money may be the best one). Provided that HMRC's rate of interest has been appplied, there is no BIK to report.

But yes.... there will be interest that needs to be paid to your company by you persoanlly.

The above is of course assuming that I understand your situation. I have assumed that; your company has generated sufficient profits to pay out the additional dividend and that by when you state 'overpaid my allowed dividends' you really mean as a result of the dividends paid on 2nd April pushed your total personal income into the higher rate tax bracket, which was not your intention.

[Platypus]

Get your accountant to make the dividend paid into the Director's Loan Account. You need to issue special minutes of the meeting (in fact it's an EGM). That way, the company pays the div but you don't draw it.

Of course the trouble is, you've taken the money, haven't you? If you paid the money into your bank a/c before April 6th, you can't do this.

[northernladuk]

Hi All,

My company tax year runs to 31 March. On the 2nd of April I figured it was a new year and paid myself a £27k dividend. My accountant has just advised me that this falls within the personal tax year which runs to 5 April.

Effectively I have overpaid my allowed dividends for the year by £27k.

Does anyone know if there is a way to reverse this transaction?

My accountant says if I change it to a Directors Loan she will need to resubmit my P11d which will alert HMRC and they will investigate my company.

Has anyone done this in the past? Did HMRC come knocking?

Thanks for your help.

Are you sure you are using the correct term here. Allowed dividends is as much as you want from profits. Did you take them from money that isn't profit?

Do you mean over the lower tax bracket or divis that you do not have the profit to pay (which would make it an illegal dividend)?

[Bratat]

Hi All,

My company tax year runs to 31 March. On the 2nd of April I figured it was a new year and paid myself a £27k dividend. My accountant has just advised me that this falls within the personal tax year which runs to 5 April.

Effectively I have overpaid my allowed dividends for the year by £27k.

Does anyone know if there is a way to reverse this transaction?

My accountant says if I change it to a Directors Loan she will need to resubmit my P11d which will alert HMRC and they will investigate my company.

Has anyone done this in the past? Did HMRC come knocking?

Thanks for your help.