Declaring a dividend for previous tax year.

silvercar

Small limited company, one director and a company secretary. 100% owned by the director. Accounts for the company are always for the calendar year. Could the company declare a dividend in their 2023 accounts and back date it to beginning of this year. So effectively it was given in early 2023, but the money not taken out of the company until now.

It would then allow the director to put it against their 2022-23 tax year personal accounts.

[Deleted User]

You can’t ‘backdate dividends’

https://www.oliverelliot.co.uk/2021/08/10/can-you-backdate-a-limited-company-dividend/

silvercar

purdyoaten2 said:

You can’t ‘backdate dividends’

https://www.oliverelliot.co.uk/2021/08/10/can-you-backdate-a-limited-company-dividend/

The accounts for 2023 haven't yet been created and a meeting to vote the dividend would be the director on their own ie a meeting of one. 

[Deleted User]

silvercar said:

purdyoaten2 said:

You can’t ‘backdate dividends’

https://www.oliverelliot.co.uk/2021/08/10/can-you-backdate-a-limited-company-dividend/

The accounts for 2023 haven't yet been created and a meeting to vote the dividend would be the director on their own ie a meeting of one. 

And that meeting would have had to take place last tax year, to declare an interim dividend, with the date of payment also being in that tax year. 

I didn’t spend a significant amount of my tax career on corporation tax but your suggestion would appear to me to fall foul of regulations. 

I imagine I will be corrected promptly by those more expert than me if I am wrong.

silvercar

[Deleted User] said:

silvercar said:

purdyoaten2 said:

You can’t ‘backdate dividends’

https://www.oliverelliot.co.uk/2021/08/10/can-you-backdate-a-limited-company-dividend/

The accounts for 2023 haven't yet been created and a meeting to vote the dividend would be the director on their own ie a meeting of one. 

And that meeting would have had to take place last tax year, to declare an interim dividend, with the date of payment also being in that tax year. 

I didn’t spend a significant amount of my tax career on corporation tax but your suggestion would appear to me to fall foul of regulations. 

I imagine I will be corrected promptly by those more expert than me if I am wrong.

The idea is that the meeting took place in say February this year. So in the 2023 accounting period of the company.

The money then retained within the company (effectively a loan from the director to the company) and only withdrawn from the company later in the year. So all within the  2023 accounting period of the company.

[Deleted User]

silvercar said:

purdyoaten2 said:

silvercar said:

purdyoaten2 said:

You can’t ‘backdate dividends’

https://www.oliverelliot.co.uk/2021/08/10/can-you-backdate-a-limited-company-dividend/

The accounts for 2023 haven't yet been created and a meeting to vote the dividend would be the director on their own ie a meeting of one. 

And that meeting would have had to take place last tax year, to declare an interim dividend, with the date of payment also being in that tax year. 

I didn’t spend a significant amount of my tax career on corporation tax but your suggestion would appear to me to fall foul of regulations. 

I imagine I will be corrected promptly by those more expert than me if I am wrong.

The idea is that the meeting took place in say February this year. So in the 2023 accounting period of the company.

The money then retained within the company (effectively a loan from the director to the company) and only withdrawn from the company later in the year. So all within the  2023 accounting period of the company.

As with my previous encounters with yourself, you appear to ask the question and then query the answers. The fact is that you didn’t have the meeting in February 2023. I will leave it there.

eskbanker

silvercar said:
The idea is that the meeting took place in say February this year. So in the 2023 accounting period of the company.

The money then retained within the company (effectively a loan from the director to the company) and only withdrawn from the company later in the year. So all within the  2023 accounting period of the company.

Did you see this in the linked article?

What Is Wrong With Backdating A Dividend?

The problem with backdating a dividend is that when you do this you are saying that things happened in the past that did not happen.

The effect is that you are seeking after the event to vary what happened and thereby change the true nature of transactions. That is not permitted and can be considered dishonest conduct by a company Director.

MeteredOut

OP, what you are possibly suggesting (lying about a meeting taking place and retrospectively creating documentation to suggest it did) is bordering on tax fraud.

But, if you do decide to go down that route, I doubt you'll be caught; you won't be the first person who has done that. Your accountant may question it though, depending on how your books are managed.

silvercar

MeteredOut said:

OP, what you are possibly suggesting (lying about a meeting taking place and retrospectively creating documentation to suggest it did) is bordering on tax fraud.

But, if you do decide to go down that route, I doubt you'll be caught; you won't be the first person who has done that. Your accountant may question it though, depending on how your books are managed.

I get your point, though a meeting of one person doesn't really require it to take place.

Jeremy535897

An interim dividend has to be declared and paid before it is taxable. The question is evidence. You would expect the company to record the decision to pay the dividend, and issue the voucher, but any document created now to do that will show when it was drawn up. Equally, any book entry to pay the dividend, presumably by way of a credit to the director's loan account, may well be dated in the accounting software prior to 6 April 2023, but the software will show the date it was put through the books. Of course, you may have no accounting software, and type minutes and vouchers on a manual typewriter, but few of us do that nowadays.

silvercar

Jeremy535897 said:

An interim dividend has to be declared and paid before it is taxable. The question is evidence. You would expect the company to record the decision to pay the dividend, and issue the voucher, but any document created now to do that will show when it was drawn up. Equally, any book entry to pay the dividend, presumably by way of a credit to the director's loan account, may well be dated in the accounting software prior to 6 April 2023, but the software will show the date it was put through the books. Of course, you may have no accounting software, and type minutes and vouchers on a manual typewriter, but few of us do that nowadays.

I don't use any accounting software as such. One single excel spreadsheet for the whole years transactions. And I have a pro-forma for dividends, that I complete by hand. It is a very small company....I'm only talking about using the personal dividend allowance.