tax credit compliance about dividends we did not receive

sam479

Hello. I hope someone can help.
My husband has a limited company. It is barely making a profit at the moment but he can pay himself a wage which we inform child tax credits. We have received a letter from the compliance team saying they have received information that he received £13,000 in dividends last year. I have contacted the accountants who arent much use who just stated 'well they have those figures now'.
We have not received any dividends from the company.
Any advice on what to do now?

sam479

the company and ourselves have bank accounts to show no dividends have been paid or received.

Icequeen99

sam479 wrote: »

the company and ourselves have bank accounts to show no dividends have been paid or received.

I think BB was referring to actual accounts rather than bank accounts.

I don't quite understand what the accountants said - surely they can confirm whether or not dividends have been paid and if they haven't can provide you with copies of the full accounts and any corporation tax returns to support this.

HMRC must have received the information from somewhere.

IQ

POPPYOSCAR

I am a little confused by all of this.

Surely your tax credits are made on the basis of information taken from your Tax returns?

Elaine_Wilson

Just to say that dividends do not have to be actually paid to a bank account to be "paid". They are treated as paid when you become absolutely entitled to them. This is often the date they are credited to a loan account the director has with the company.

Now, you need to look at the last annual statutory accounts produced by the accountant. I assume these would have been approved by your husband before being submitted to the authorities. Any dividend declared should show in a note to the accounts reconciling movements on the Profit and Loss account.

Why was the dividend declared? If a person is receiving tax credits I would only normally recommend voting a dividend if the director/shareholder had drawn money in excess of his salary. But every case is different. The accountant should be able to explain why this was done.

Poppie68

For HMRC to have the information...could this be down to them discovering the £13,000 in a bank account? With regards to the comment from the accountant 'well they are the figure that they have got now' strange thing for them to say if it's incorrect, surely the accountant would only submit the correct information and figures?

sam479

Thank you for all your replies.
Yes my husband did sign the account without checking them!
i do not understand how the account has come to £13,000 dividends. Sales were around £39,000 and outgoings (all outgoings incl wages) were around £35,000 so were is the £13,000 in between ?? There has never been £13,000 in the bank account to give away!