ESC

Click the "allow" button if you want to receive important news and updates from immigrationboards.com


Immigrationboards.com: Immigration, work visa and work permit discussion board

Welcome to immigrationboards.com!

Login Register Do not show

Overpayment of Dividends

Archived UK Tier 1 (General) points system forum. This route no longer exists.

Moderators: Casa, push, JAJ, ca.funke, Amber, zimba, vinny, Obie, EUsmileWEallsmile, batleykhan, meself2, geriatrix, John, ChetanOjha, archigabe, Administrator

Locked
kans75
Junior Member
Posts: 65
Joined: Sat Oct 25, 2008 8:58 pm

Overpayment of Dividends

Post by kans75 » Thu Jan 26, 2012 9:48 pm

Hi
My accountant recently pointed out that I have overpaid my dividends from my LTD co. for one quarter without keeping much reserves. He suggested that the amount could be reverted back to the business account and redeclare the correct dividend as my company accounts and returns are yet to be filed.

My queries:

1.Has anyone come across similar similar situation?

2.Can HO raise any query on the same? (i.e, the error will be notified in the accountants covering letter)?

Any senior accountant, please advise.

Rgds
K

AccountantMatthew
Member of Standing
Posts: 301
Joined: Mon Jul 04, 2011 4:20 pm
Location: London Town

Post by AccountantMatthew » Fri Jan 27, 2012 7:50 am

1.Has anyone come across similar similar situation?
Yes - it's not unique. The amount paid will end up being debited as a director loan for you to pay back or for it to be 'converted' into a dividend at a later date.
2.Can HO raise any query on the same? (i.e, the error will be notified in the accountants covering letter)?
Hard to step into the mind of a caseworker - they may not really know the laws behind dividends (not trying to sound patronising to them, their field of knowledge/expertise is going to be elsewhere that's all).

As the payment isn't a dividend and isn't being claimed as such as part of previous earnings, I'd guess that it's less likely to be questioned because the risk for them will be with what is claimed rather than what is not.

Plus your accountant is explaining what has happened too. Trust him/her they know what they're doing!
Please don't private message me or e-mail me for free personal advice - you are just wasting your time writing something that won't get answered.
Anything written here shouldn't be construed as being formal advice given in a professional capacity.

kans75
Junior Member
Posts: 65
Joined: Sat Oct 25, 2008 8:58 pm

Post by kans75 » Fri Jan 27, 2012 8:14 am

Hi Matthew,
Thanks for your reply.its something new for me and seniors like you are more helpful.
Can I go ahead and transfer the dividends back and redeclare the correct one.
Rgds
k
quote="AccountantMatthew"][quote]1.Has anyone come across similar similar situation? [/quote]

Yes - it's not unique. The amount paid will end up being debited as a director loan for you to pay back or for it to be 'converted' into a dividend at a later date.

[quote]2.Can HO raise any query on the same? (i.e, the error will be notified in the accountants covering letter)?[/quote]

Hard to step into the mind of a caseworker - they may not really know the laws behind dividends (not trying to sound patronising to them, their field of knowledge/expertise is going to be elsewhere that's all).

As the payment isn't a dividend and isn't being claimed as such as part of previous earnings, I'd guess that it's less likely to be questioned because the risk for them will be with what is claimed rather than what is not.

Plus your accountant is explaining what has happened too. Trust him/her they know what they're doing![/quote]

AccountantMatthew
Member of Standing
Posts: 301
Joined: Mon Jul 04, 2011 4:20 pm
Location: London Town

Post by AccountantMatthew » Fri Jan 27, 2012 9:00 am

Although from what you say here kans75 that there is no stopping you from doing this, it's best to speak with your accountant first as there is more than one way of proceeding. As they are the closest to your affairs and will be completing some paperwork around this, it's best to proceed how they say just to save time later down the line.
Please don't private message me or e-mail me for free personal advice - you are just wasting your time writing something that won't get answered.
Anything written here shouldn't be construed as being formal advice given in a professional capacity.

QuickSam
BANNED
Posts: 794
Joined: Mon Dec 05, 2011 3:51 pm
Location: Reading, UK

Post by QuickSam » Fri Jan 27, 2012 11:37 am

I think 'AccountantMatthew' is better equipped to answer your queries but as he has already stated that it's up to you to decide what dividend you want to pay yourself, it shouldn't really matter (please correct me if I am wrong).

I am not sure but I think the worry in this case would be paying up more tax. If that is the case, that shouldn't really matter right now because you are going for an extension.

Check with your accountant, if you could just balance out the dividend by paying less dividend in the subsequent months. I am not sure if there is a law that states that you should have x amount of money in you business bank account at all times.

Anyways most people who feel they would fall short of the required salary mark, bulk up there payments towards the end by paying a single or couple (in 2-3 months) of dividends. If that is legal, I don't understand why paying an x amount extra would be accounted as incorrect.

AccountantMatthew
Member of Standing
Posts: 301
Joined: Mon Jul 04, 2011 4:20 pm
Location: London Town

Post by AccountantMatthew » Fri Jan 27, 2012 7:18 pm

... as I say just speak to your accountant!

S/he will be able to help you (as they seem to be doing anyway) and can explain what has happened, why it has, what will happen and why they are suggesting what they're suggesting.
Please don't private message me or e-mail me for free personal advice - you are just wasting your time writing something that won't get answered.
Anything written here shouldn't be construed as being formal advice given in a professional capacity.

Sushil-ACCA
Diamond Member
Posts: 1234
Joined: Wed Apr 02, 2008 1:47 pm
Location: Wembley Park

Post by Sushil-ACCA » Sat Jan 28, 2012 3:13 pm

HOW COME dividend is given more by a/cts very rare scene

unless now a/cs want manupulate books

if on basis of previous version of a/cs any visa obtained than it wil be amount to fraud


basically not meeting earning threshold

this kind of practice r done by some a/cs to cheat authorities with permission of client .

AccountantMatthew
Member of Standing
Posts: 301
Joined: Mon Jul 04, 2011 4:20 pm
Location: London Town

Post by AccountantMatthew » Sat Jan 28, 2012 4:47 pm

.... OK - just so that you aren't getting confused kans75 (or anyone else reading this) here is a good article about your situation that is relatively user friendly and that has been written with contractor company directors in mind. Just to clarify I am not connected with this website or the business behind it in any way:

http://www.contractorcalculator.co.uk/i ... ained.aspx

If you also want to know about the relevant statutes with this 'illegal dividends' then refer to s830, ss836-840 and s847 of the Companies Act 2006.

If you were alluding to backdating dividend declarations in your earlier post (I read it that you were just going to declare a dividend when you could do further down the line rather than backdating anything) then don't as it's illegal. Very illegal! Accountants shouldn't recommend this and I would like to think that they don't (and just to clear things up if anyone is trying to infer that I have done so in this thread then they are very, very wrong).

Interim dividends are also declared by directors and not accountants. However just to help you understand the situation and how you progress I suggest that you speak with your accountant with the link above giving you some further background.
Please don't private message me or e-mail me for free personal advice - you are just wasting your time writing something that won't get answered.
Anything written here shouldn't be construed as being formal advice given in a professional capacity.

kans75
Junior Member
Posts: 65
Joined: Sat Oct 25, 2008 8:58 pm

Post by kans75 » Sat Jan 28, 2012 9:42 pm

Hi Matthew

I understand that only directors can issue dividends and not accountants.
As mentioned earlier, when going through the company accounts for last year, my accountant realised, there was an overpayment of dividend in spite of company having enough funds(i.e, my initial capital which was given as loan during start up).

I think dividends can't be paid from the initial capital money even though it is company's funds.(correct me if i'm wrong).

The proposed solution was to transfer back that dividend to the company a/c and take correct dividends as per statutory guidelines for the current period(not backdated period). Is it illegal?
Also was mentioned that final accounts are yet to be filed for the year and correction could be carried out.

The reason for posting this query is to get the view of senior members who could have different views and know what i am doing is correct.

Hope this clarifies.

Regards
K





AccountantMatthew wrote:.... OK - just so that you aren't getting confused kans75 (or anyone else reading this) here is a good article about your situation that is relatively user friendly and that has been written with contractor company directors in mind. Just to clarify I am not connected with this website or the business behind it in any way:

http://www.contractorcalculator.co.uk/i ... ained.aspx

If you also want to know about the relevant statutes with this 'illegal dividends' then refer to s830, ss836-840 and s847 of the Companies Act 2006.

If you were alluding to backdating dividend declarations in your earlier post (I read it that you were just going to declare a dividend when you could do further down the line rather than backdating anything) then don't as it's illegal. Very illegal! Accountants shouldn't recommend this and I would like to think that they don't (and just to clear things up if anyone is trying to infer that I have done so in this thread then they are very, very wrong).

Interim dividends are also declared by directors and not accountants. However just to help you understand the situation and how you progress I suggest that you speak with your accountant with the link above giving you some further background.

AccountantMatthew
Member of Standing
Posts: 301
Joined: Mon Jul 04, 2011 4:20 pm
Location: London Town

Post by AccountantMatthew » Sun Jan 29, 2012 8:07 am

My later posts have really been to try and clarify the general scenario and what has been said since your original query kans75 rather than anything else.

Your situation looks clearly in hand and has done ever since your accountant spotted what had gone on. I'm sure they will also be able to help in preventing any repeats of this.

All the best.
Please don't private message me or e-mail me for free personal advice - you are just wasting your time writing something that won't get answered.
Anything written here shouldn't be construed as being formal advice given in a professional capacity.

Locked
cron