Reply to: Limited Company 2 Directors - Tier 1 extension, different dividends

[Scruff]

A dividend can be declared, with no cash changing hands. The cash can be withdrawn at a later date, when sufficient cashflow allows.

Journal Entry for declaring dividend:

Debit - Dividend Paid
Credit - Shareholder for Dividend

When cash is available - pay it and the cashbook entry will create:
Debit - Shareholder for Dividend
Credit - Bank Account

I would definitely suggest talking to your accountant and enquire as to his qualification?

[Podgy]

Because it becomes wide open for abuse, people hitting their tax limits perfectly or bumping up one director to hit a limit he needs. The idea is you have a share in a company, not a tool you can fudge as you like for your own needs.

But it is legal?

[northernladuk]

Surely there can be a note in the accounts that the directors agreed to defer Dividend payment for said shareholder until a certain date - so long as a deferral is agreed by both directors (based on cash at bank) surely there is no problem? Pay 1 defer 1 - whats the problem with that?

Because it becomes wide open for abuse, people hitting their tax limits perfectly or bumping up one director to hit a limit he needs. The idea is you have a share in a company, not a tool you can fudge as you like for your own needs.

[Podgy]

Yes it is a problem. Unless your wife is on a different class of share you must give her the same. You could do a dividend waiver but HMRC will not like this at all. Try doing for a search on dividend waiver on here. You have a 50-50 split so dividends must be split 50-50. Do it properly or don't do it all. Fudging your accounts just to stay in the country is not only going to get you in trouble with the tax man but also could result in you failing your application.

I don't know how visa stuff works but I would hope to god the UKBA will do extensive checks including with HMRC.

Surely there can be a note in the accounts that the directors agreed to defer Dividend payment for said shareholder until a certain date - so long as a deferral is agreed by both directors (based on cash at bank) surely there is no problem? Pay 1 defer 1 - whats the problem with that?

[doodab]

UK Border Agency | Appendix A - Attributes

Sounds like you need an accountant anyway.

[ISingh]

Shame being useless isn't a visa fail.
I have to deal with this crap day to day at work. Not on here as well!

You not like the answers in the other thread you started?

Hi
Sorry I didnt recieve any notification for responses on the other thread. So just didnt check it.
Doing it now. Thanks for your comments.
Cheers
ISingh

[northernladuk]

Shame being useless isn't a visa fail.
I have to deal with this crap day to day at work. Not on here as well!

You not like the answers in the other thread you started?

[ISingh]

No Dividends paid to 2nd share holder-company dissolved

Hi Guys,
I am worried about UKBA doing checks for previous application. can you please take few minutes to read my issue and advise if it can be an issue for me in my next application: (Apologies for the long note below but I wanted to explain it in detail for a clear picture)

I have been in the UK under HSMP (Obtained in January 2008) and then got extensions under Tier 1 General. I actually have to take another Tier 1 general EXTENSION as I went out of UK for a couple of months and I dont meet the 180 days outside UK criteria to be elligible for ILR now.

My issue:

During the last Tier 1 Extension I showed Income proof (Dividends) from my Limited company (1st 3 months when I was working in a contract job through my own ltd Co. as Director) Plus Salary Slips from a Permanent Job for the next 9 Months. (Left contracting and took a permanent job)
Totalling earnings earned in 12 months prior to my extn application. I successfully got the extension under Tier 1 General.

The issue is: My Limited company had 1200 shares. 1000 allocated to ME and 200 allocated to another share holder.
During the last Tier 1 Extension, I took all the 100 Percent Dividend and didnt pay any dividend to the share holder. I showed all dividend paid to me in application to UKBA
Actually I had discussed it with my accountant and we had decided to transfer all shares on my name at the end of the year when we had to actually file all returns to HMRC and close the company as I had gone into a permanent job and didnt need the Ltd company anymore.

So, I got the Extension that time and asked my accountant to close the company. He started the company dissolving process but somehow we missed transferring all shares to me and as earlier had all dividends paid only to me. Even I was bit careless and didnt really bothered about 200 shares on another persons name in my company. I paid HMRC the Corporation tax and VAT whatever was calculated and closed the company. Now the company is dissolved and struck off and I need to apply for my Second Tier 1 General Extension as I need to spend some more time in the UK to be elligible for ILR.

My concern is that since we have missed transferring all shares to my name but I had taken all the Dividends that time (i.e. 2 years ago), would it create any issue for me in my next Tier 1 Extension?? I am in a permanent job now and will just be using income earned in the last 12 months from this job and this time there is nothing to do with my Ltd Company which operated for just 3 months and now closed.

I am really worried that if Home Office checks these records will they find out and will they question me that why the second share holder was not paid any dividends and will it create issues in my extension this time? Does Home Office bother goin into so much depth of previous applications?

As I said my Ltd company just operated for 3 months and is dissolved now. I have paid all the Taxes and VAT that was calculated to HMRC. Just worried about the dividends not being paid to the second shareholder. Is it really a serious issue?

Please help me on this and I would really appreciate if you could give me some advise.
Awaiting your responses.
Many Thanks
I Singh

[Greg@CapitalCity]

I have a limited company with 50 - 50 split between me and my wife.

If you prepared your application based on company profits rather than salary/dividends paid, would that help you get the required earnings. An immigration adviser will be able to discuss with you the merits of this approach.

[Andrew at Boox]

You should also make sure that your payslips and dividend certificates match the exact amounts paid into your personal account for your visa application. In our experience we've had clients get this wrong, only to be disappointed when they file their application. Payments in on your bank statements must equal payslips and/or dividend certificates.

[northernladuk]

You can, see my UKBA link above.

Dividend vouchers must show the amount of money paid by the company to you, normally from its profits.

This line makes me smile. Are they condoning taking dividends from anything else but profit?

[stek]

You also appear to be confusing Dividends with Salary. They are not the same thing. As I understand it you must be able to show a salary of at least £40,000. Dividends are *not* salary and you cannot use them to make up the salary limit for the visa requirements.

You can, see my UKBA link above.

Dividend vouchers

Evidence of your previous earnings
This page explains the requirements for dividend vouchers that you send to support your application to the highly skilled worker category (Tier 1 General) under the points-based system to work in the United Kingdom.

Full details of all requirements are in the immigration rules at paragraphs 245A-F of part 6A, and Appendix A, which you can find on the right of this page. You must read the policy guidance before you apply under this category. You can download the guidance and application form from the Applying section.

What the dividend vouchers must show
Dividend vouchers must show the amount of money paid by the company to you, normally from its profits. They should confirm both the gross and net dividend paid. You should provide a separate dividend voucher or payment advice slip for each dividend payment, to cover the whole period claimed.

[DaveB]

Hi

I have a limited company with 50 - 50 split between me and my wife.

I am going for Tier 1 extension and my wife is on tier 1 dependent. I have given all the dividends equally to both of us, but not the last one (amount 9500 pounds). Last dividend is given to me only as there is not enough profit in the company on the day gave the dividend, to give the same dividend to my wife. I wanted to take this dividend to satisfy the 40K salary limit for my Tier 1 visa extension.

Now I have complete salary and dividends to satisfy the Tier 1 extension, but if in case the Case worker will check the company accounts he will be able to know that the last dividend was not given to my wife.

Will this be a problem ?

I am planning to give the same amount of dividend to my wife next month when the payments of next month will come. (but that period will be outside of the 12 month period for which I am showing my earnings)

I am not sure whether UKBA will check how the company is operating and giving the same share to both directors or not, Or is this just the responsibility of HMRC.

Please guide me as I am going to extension on same day service next week

Thanks

You also appear to be confusing Dividends with Salary. They are not the same thing. As I understand it you must be able to show a salary of at least £40,000. Dividends are *not* salary and you cannot use them to make up the salary limit for the visa requirements.

[northernladuk]

Thanks for your reply

The other option with me is to transfer the share 100 to me and then claim the complete dividend. Will it be fine if I become the 100 owner.

And what is the best way to transfer the shares.

Please guide

Thanks

I presume you don't have an accountant? Big mistake number 3. Go get an accountant and get them to help you cause you are up to your neck in it right now.#

I guess with your slack attitude to your business you will expect to transfer the shares back to your wife for next year. That is going to have HMRC round like a shot. Fudging share around for anything other than business reasons is raising a nice big red flag.

[Scoobos]

You need to get an accountant and your immigration advisor to talk to each other and look at all your circumstances so they can advise you on what to do. If you are earning 40k then you can afford to do it too, don't try to do it yourself or you will make an even worse mess of it than you have.

What he said and NLUK too.