Undeclared dividends targeted by HMRC

HMRC are now turning their gaze to Company Directors where they suspect dividends have been drawn but not declared. Their focus is on investigating company reserves where profits have been made but the reserves are depleted, suggesting a dividend may have been taken.  A challenge is then made giving the owners an opportunity to declare […]

HMRC are now turning their gaze to Company Directors where they suspect dividends have been drawn but not declared.

Their focus is on investigating company reserves where profits have been made but the reserves are depleted, suggesting a dividend may have been taken.  A challenge is then made giving the owners an opportunity to declare any taxable dividends or otherwise confirm there were none.  Penalties can be charged up to the level of tax previously avoided or if incorrect amounts have been disclosed.  It is possible that this may then trigger a full scale enquiry.  According to the correspondence issued by HMRC, taxpayers will be given 30 days to notify that there is nothing to declare.  Companies who need to disclose anything can use the online disclosure facility but registration needs to be completed first.

This campaign follow the decision by HMRC in April 2023 to halve the dividend allowance from £2,000 to £1,000; this will be further reduced to £500 in April 2024.  The change is expected to raise £450m in 2024/25 raising to £810m in 2025/26 for the Treasury.

It is now more important than ever that dividends are properly documented and declared correctly to avoid unwanted scrutiny from HMRC.  Anyone affected should seek professional help urgently.

If you have any queries on this or would like assistance please contact Stephen Williams on 01633 653174 stephen.williams@kilsbywilliams.com.

Alternatively, please contact your usual advisor on 01633 810081 or email info@kilsbywiliams.com.

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