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Don Tax


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Dividends - Not sure how to answer client question
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Hi peeps,

Can I put a question out there to help me think through how to answer but any guidance gratefully received. 

A client has asked me if she "can reduce the dividends taken by the amount he's paid off during the year."

 

Without going into too much sordid detail:-

She has a b/f loan account of £25k (much worse before we took over)

Has entries of £18k described as 'company loan repayments'.

Has taken £58k described as 'dividends' - slightly more than gross profits but forgotten profits are taxed

Eventual Dividend £45k net as per P&L

 

I feel a bit better about answering it already but, as I say, it'd be great to have any input. 

Tvm



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gbm


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Not sure if I understand the terminology, is the situation:

opening o/d DLA £25k

Drawn by client £58k

Less 'repayments' £18k

Less dividends declared £45k

= closing o/d DLA £20k

Was there any paperwork for the dividends?

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Regards,
Nick

Website: www.gbmaccounts.co.uk
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Factsheet | Starting a Business

 
Don Tax


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Nah, no paperwork for the dividends, Nick. The final dividend is up to us to calculate and I've got the job of papering over the cracks. I think it basically just took me aback at being asked such a bizarre question.

Thanks for your input and thoroughly agreed that all these entries need to be sieved through the DLA. As you've seen she's taking two steps forward and one step back and its the same every year. Strangely enough the VAT records are quite good - the PAYE not bad, but will have to be better next year.

My answer will be along the lines of 'you're still drawing far too much for personal use' and a quick run down as to how it works, as you've suggested.

Thanks again,
Tim





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gbm


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I hate those kind of jobs, where you are continually playing catch up and trying to get everything square - avoiding overdrawn DLA and the lovely tax consequences.

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Regards,
Nick

Website: www.gbmaccounts.co.uk
Twitter

Factsheet | Starting a Business

 
Don Tax


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Me too - she's had a s455 bill every year and I found a big skeleton in the cupboard courtesy of the previous bod. I only took it on when keeping lots of balls in the air left on my own here a couple of years ago. I want close the comp. but want the DLA straight first.

I'm half being guided on it but there's so many twists and turns, I want to learn as much from it as I can. One thing I know about this career is that I'll never know everything.

Cheers, Nick.




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