Undeclared dividend payments are being targeted by HMRC

Undeclared dividend payments are being targeted by HMRC

Company directors that HMRC suspect of earning dividends, which are not being declared on their self-assessment tax returns are being contacted by HMRC.

If you have received a letter from HMRC regarding this, please get in touch with us here at Kennedys Accounting if you need some assistance.

HMRC have advised that they are writing to company owners informing them that they may need to declare dividend income.

It seems that HMRC has been investigating company reserves, which identifies companies that have made a profit but have depleted reserves, which could mean that a dividend payment has been made.

The company shareholders are being given the option to disclose information on any dividends that have not been declared or inform HMRC if they believe there is nothing more to declare.

The cut in the dividends allowance to £500 which came into effect from April 2024 is likely to affect over 3,000,000 people in 2023, which is likely to increase to over 4,400,000 for the 2024-25 tax year.

Taxpayers will be given 30 days to notify HMRC if there is nothing to declare.

Any penalties which are subsequently charged could be as much as the same amount of tax due if wrong amounts have been submitted, plus interest charged per day for any late payments.

There will be an online disclosure form available for companies to register anything owed. Interest and penalties can also be paid through this service once a payment reference number (PRN) has been received in the post.

There is a 90-day deadline after receipt of the PRN; if this is not met HMRC can open a compliance check and charge higher penalties if undeclared dividend payments are found.

If you need any assistance with your self-assessment tax returns, please contact us, the team at Kennedys Accountants will be pleased to assist you.