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Finances / Finanzen » uk.finance » Tax year balls-up
| Re: Tax year balls-up [message #380282 ] |
Mo, 17 April 2006 19:15 |
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>Okay, technically and legally he can't backdate something that he
>hasn't decided until after year end, but the fact remains that but for
>a simple piece of paperwork there wouldn't be any lost revenues.
But it is not a matter of a simple piece of paperwork. It is a matter
of the decision to declare a dividend having been made at the right
time. It clearly was not made at the right time. Let us not pretend
that it was!
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| Re: Tax year balls-up [message #380283 ] |
Mo, 17 April 2006 19:18 |
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>It happens all the time in large companies, where provisions, etc often
>aren't decided until after year end.
There is nothing in law that says that to be valid a provision has to
be decided upon before the year end date. There is a world of
difference between deciding upon the amount of a provision *before
signing off the accounts* and pretending that a dividend was declared
upon a certain date when it clearly was not.
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| Re: Tax year balls-up [message #380284 ] |
Mo, 17 April 2006 19:22 |
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>These people don't live in the real world. They can't solve problems or
>make corrections.
'Solving' a problem by committing a fraudulent act is not in fact
solving anything. It is compounding the problem!
>If you stick a stamp on upside-down, or use a blue
>pen when it said you must use a black pen, that's "fraud".
You really do not understand the concept of fraud do you Troy? I hope
that you are not a professional accountant for the sake of your clients!
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| Re: Tax year balls-up [message #380285 ] |
Mo, 17 April 2006 19:24 |
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>> ... SandalsMan... strikes me as a young, keen
>> accountant. You have to ask what possible benefit
>> such an accountant could be to any client. What
>> benefit would he ever bring which would justify his fee?
>Maybe the benefit of not being chased by HMRC,
>and not being taken away by the police? ;-)
Thank you Tim, I could not have put it better myself. What world do
these people live in? They do not realise that by committing fraud, in
back-dating documents, they are not only putting their clients at risk
but they are also putting themselves, their livelihood and their own
profession at risk!
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| Re: Tax year balls-up [message #380286 ] |
Mo, 17 April 2006 19:40 |
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>According to http://maid.yasp.com/news/041202.html , the date of a
>dividend credited to a director's loan account is the date the dividend
>is entered in the accounting records.
Well that is one of the ways of establishing the date of payment of a
dividend. However if that entry on the loan account is in fact
back-dated (i.e. it shows a date other than that on which the actual
entry is made) then that is not *in fact* the date of the dividend.
>Given accountants' propensity for backdating all their journals to fit
>into the year end, is the date the dividend is entered the journal date
>or the actual calendar date?
The date upon which the journal is written up (not the date entered on
the journal) may be the date of the dividend. It all depends upon the
FACTS which may, or may not, be correctly evidenced by the paper work.
The back-dating of journals may or may not itself have consequences;
the journal may simply be recording something that has already
happened. The point is that in this instance the dividend had not
happened (according to the OP's original wording) but it was being
advocated here that documentation should be drawn up to pretend that it
had happened. That is the fraudulent act.
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| Re: Tax year balls-up [message #380291 ] |
Mo, 17 April 2006 20:21 |
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"Troll Stupidman" <troysteadman [at] yahoo.co.uk> wrote in message
news:1145290887.471423.13350 [at] i39g2000cwa.googlegroups.com...
>
> Holding a properly convened meeting, albeit with yourself in the bath,
> where you properly vote yourself a dividend in acordance with the M&A,
> isn't breaking the law.
>
jees, you don't harf get up to sum strangley fings in yer barth trolly!!
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| Re: Tax year balls-up [message #380294 ] |
Mo, 17 April 2006 20:46 |
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"SandalsMan" <jbenator [at] gmail.com> wrote in message
news:1145295619.756953.203070 [at] v46g2000cwv.googlegroups.com...
> >According to http://maid.yasp.com/news/041202.html , the date of a
>>dividend credited to a director's loan account is the date the dividend
>>is entered in the accounting records.
>
> Well that is one of the ways of establishing the date of payment of a
> dividend. However if that entry on the loan account is in fact
> back-dated (i.e. it shows a date other than that on which the actual
> entry is made) then that is not *in fact* the date of the dividend.
>
>>Given accountants' propensity for backdating all their journals to fit
>>into the year end, is the date the dividend is entered the journal date
>>or the actual calendar date?
>
> The date upon which the journal is written up (not the date entered on
> the journal) may be the date of the dividend. It all depends upon the
> FACTS which may, or may not, be correctly evidenced by the paper work.
> The back-dating of journals may or may not itself have consequences;
> the journal may simply be recording something that has already
> happened. The point is that in this instance the dividend had not
> happened (according to the OP's original wording) but it was being
> advocated here that documentation should be drawn up to pretend that it
> had happened. That is the fraudulent act.
>
This is quite an intriguing thread, for (like so many, alas) so much is
derived from assumption rather than statements from previous posters.
Although the first reference to "fraud" in this thread was your reply to
Shano, you subsequently used the term in reply to me when you said "If you
.... gain a tax advantage by making up documentation ... then that is fraud."
I don't recall suggesting "making up documentation". But it is important to
understand what documentation is needed, when it is needed, what date it
should carry etc.
It seems to me the confusion here arises because some posters have made the
assumptions (a) that no dividend was declared before 6th April, and (b) the
Company has not taken advantage of the special provisions (ERs etc)
available to small Coys to waive formal notice of meetings, skip AGMs, etc.
It may very well be the case that no decision was made before 6/4, but given
that the OP had already sought other advice before posting here, it is IMO
quite feasible he had decided on or before 5/4 to pay a dividend - albeit he
may not have known the correct procedure to follow, having made that
decision.
The OP spoke of "wanting to make a payment". Making a payment is not the
same as declaring a dividend.
And this is the crux. Declaring a dividend is not something which is done
in writing. The declaration is the taking of the decision - either made by
the Board or by the Members if recommended by the Board.
He either bathed alone (interim) or with his wife (final). (For pedants, I
accept that either can be declared by the Board alone, or by the members)
Assuming it is the Director's decision alone in this case (it has all the
appearance of an interim div) no documents need to have been raised before
6/4. The only documents required are those recording the decision, and like
all minutes (Kremlin excepted) they should be written _after_ the meeting.
Other issues are whether sufficient profits were available for distribution
(there were), and whether cash was (yet) available to make the payment
(dealt with presumably via loan account).
In defence of those whom you accuse of advocating "fraud", (a) I haven't
seen a post from any accountant here advocating "fiddling" or backdating
documents, such as to commit a fraud, (b) no-one has established that the
declaration didn't pre-date 6/4.
A little knowledge is not necessarily a dangerous thing - but knowing that
you don't know it all (e.g. understanding the distinction between
documention surrounding a dividend and the process of declaring a dividend)
has led you to shout foul before examining the replay.
--
Martin
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| Re: Tax year balls-up [message #380308 ] |
Mo, 17 April 2006 22:35 |
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>I don't recall suggesting "making up documentation". But it is important to
>understand what documentation is needed, when it is needed, what date it
>should carry etc.
Juts to remind ourselves, the OP said: "I have discovered that this
might be tricky: dividends it seems are taxed when the money is paid,
not when the dividend is actually dated (which could be back dated)"
That's when I started the alarm bells ringing. The OP said nothing
about having decided to pay a dividend whilst he was in the bath!
Other posters said it was possible to draw up the documentation, as I
recall, to show that a dividend had been declared, when it plainly had
not!
>It seems to me the confusion here arises because some posters have made the
>assumptions (a) that no dividend was declared before 6th April,
It is not an assumption that no dividend was declared before 6 April.
It is clear from the OP's original posting. NO dividend was declared
before 6 April, that much is fact!
>IMO
>quite feasible he had decided on or before 5/4 to pay a dividend - albeit he
>may not have known the correct procedure to follow, having made that
>decision.
It might be *feasible* that he had decided, but the fact is, as shown
in his original posting, he had NOT in fact decided to declare a
dividend. Why would he be asking about it if he had already decided to
declare one? Come on!!
>He either bathed alone (interim) or with his wife (final). (For pedants, I
>accept that either can be declared by the Board alone, or by the members)
The OP said nothing about any decisions whilst bathing! That concept
was introduced by a later poster when hypothesising as to what he
*might* have done. You now seem to be turning that into fact!
>Assuming it is the Director's decision alone in this case (it has all the
>appearance of an interim div) no documents need to have been raised before
>6/4.
No one is saying that documents did 'need to have been raised', as you
put it, before 6 April. However if documents are created which attempt
to show that it had been decided to declare a dividend whilst having a
meeting in the bath or wherever prior to 6 April, when the fact is that
no such decision was made on that earlier date, and those documents are
put forward to HMRC in an attempt to gain a tax advantage, HMRC could
well view that as fraudulent. There is a distinction there which you
are overlooking!
>In defence of those whom you accuse of advocating "fraud", (a) I haven't
>seen a post from any accountant here advocating "fiddling" or backdating
>documents, such as to commit a fraud, (b) no-one has established that the
>declaration didn't pre-date 6/4.
I don't know whether the poster(s) was/were accountants or not, but it
was certainly suggested that documentation could be drawn up to show
(or pretend) that the dividend had been declared prior to 6 April, when
the OP's original posting showed that no such declaration had been
made. Just to be clear, we are talking about drawing up documents
(whether back-dated or not) which attempt to show that a declaration of
dividend had been made on a certain date, when it is obvious that no
such declaration had been made.
>A little knowledge is not necessarily a dangerous thing - but knowing that
>you don't know it all (e.g. understanding the distinction between
>documention surrounding a dividend and the process of declaring a dividend)
>has led you to shout foul before examining the replay.
Martin, I have more than a little knowledge in these matters, so please
don't make such assumptions about me. I do understand the processes
involved and I also understand how HMRC might react to such a scenario.
I am also familiar with people, and it appears you might be one of
them, who use a play on words and attempt to confuse the issues to gain
some kind of tactical advantage. The facts speak for themselves.
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| Re: Tax year balls-up [message #382725 ] |
Di, 18 April 2006 00:52 |
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On 17 Apr 2006 09:48:56 -0700, "shano" <smithmp3 [at] hotmail.com> wrote:
>Well I'm not sure I actually do!
>
>According to http://maid.yasp.com/news/041202.html , the date of a
>dividend credited to a director's loan account is the date the dividend
>is entered in the accounting records.
>
>Given accountants' propensity for backdating all their journals to fit
>into the year end, is the date the dividend is entered the journal date
>or the actual calendar date?
I think the first sentence answers the second sentence question.
--
Peter Saxton from London
peter [at] petersaxton.co.uk
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| Re: Tax year balls-up [message #382729 ] |
Di, 18 April 2006 10:31 |
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"Martin" wrote
> ...
> The OP spoke of "wanting to make a payment". Making
> a payment is not the same as declaring a dividend.
Of course.
"Martin" wrote
> And this is the crux. Declaring a dividend
> is not something which is done in writing.
> The declaration is the taking of the decision...
Whilst true, I don't believe that is the "crux".
The crux of the matter is that the OP
*didn't* make the decision before 6 April...
I think the biggest clue is in the OP's phrase:
"What I would like to do (or to have done already)..."!!
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| Re: Tax year balls-up [message #382735 ] |
Di, 18 April 2006 20:17 |
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"SandalsMan" <jbenator [at] gmail.com> wrote in message
news:1145380737.563635.78800 [at] e56g2000cwe.googlegroups.com...
> >Can you imagine any other profession taking this stance, Tim?
>
> Can you imagine any other profession, Tim, where the professional might
> advise his client to commit a fraudulent act, even though the client
> may not recognise it as such, but the professional surely should?
>
I would expect the professional to dig down for the facts. Starting with
"When did you decide you wanted to pay a dividend?" That is not the same as
assuming such a decision wasn't made until the OP thought "Gosh - how do I
pay this if I haven't yet received and cleared a client's cheque?"
At no point has the OP mentioned "declaring" a dividend. It would be
unprofessional not to ask if (a) he did so, and (b) when.
As a matter of interest (and, in a sense, to repeat Troy's point of several
days ago), what response would you give to a client who says "I paid this
dividend to myself last month. Please would you do whatever is necessary to
make it legit." If s/he couldn't recall the date and time of the
declaration, would you treat the payment as a loan (potentially taxable and
reportable to HMRC), a salary (potentially taxable and reportable to HMRC),
a dividend (potentially taxable and reportable to HMRC) or theft (not
taxable nor reportable to HMRC, but potentially reportable to NCIS).
You will be aware, of course, of how HMRC would treat the payment.
--
Martin
[Remove barrier to reply]
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| Re: Tax year balls-up [message #382741 ] |
Di, 18 April 2006 19:18 |
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>Can you imagine any other profession taking this stance, Tim?
Can you imagine any other profession, Tim, where the professional might
advise his client to commit a fraudulent act, even though the client
may not recognise it as such, but the professional surely should?
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| Re: Tax year balls-up [message #382747 ] |
Di, 18 April 2006 21:13 |
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On Tue, 18 Apr 2006 18:17:20 GMT, "Martin"
<ngng [at] ngngng.BARRIER.fsnet.co.uk> wrote:
>
>"SandalsMan" <jbenator [at] gmail.com> wrote in message
>news:1145380737.563635.78800 [at] e56g2000cwe.googlegroups.com...
>> >Can you imagine any other profession taking this stance, Tim?
>>
>> Can you imagine any other profession, Tim, where the professional might
>> advise his client to commit a fraudulent act, even though the client
>> may not recognise it as such, but the professional surely should?
>>
>
>I would expect the professional to dig down for the facts. Starting with
>"When did you decide you wanted to pay a dividend?" That is not the same as
>assuming such a decision wasn't made until the OP thought "Gosh - how do I
>pay this if I haven't yet received and cleared a client's cheque?"
>
>At no point has the OP mentioned "declaring" a dividend. It would be
>unprofessional not to ask if (a) he did so, and (b) when.
>
>As a matter of interest (and, in a sense, to repeat Troy's point of several
>days ago), what response would you give to a client who says "I paid this
>dividend to myself last month. Please would you do whatever is necessary to
>make it legit." If s/he couldn't recall the date and time of the
>declaration, would you treat the payment as a loan (potentially taxable and
>reportable to HMRC), a salary (potentially taxable and reportable to HMRC),
>a dividend (potentially taxable and reportable to HMRC) or theft (not
>taxable nor reportable to HMRC, but potentially reportable to NCIS).
>
>You will be aware, of course, of how HMRC would treat the payment.
I would go for a dividend. Are you saying the dividend was paid in
cash (or goods!)? If not I would have thought there would be evidence
of at least the payment date. Paying a dividend would imply that the
client decided to pay a dividend.
--
Peter Saxton from London
peter [at] petersaxton.co.uk
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| Re: Tax year balls-up [message #382751 ] |
Di, 18 April 2006 21:23 |
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>As a matter of interest (and, in a sense, to repeat Troy's point of several
>days ago), what response would you give to a client who says "I paid this
>dividend to myself last month. Please would you do whatever is necessary to
>make it legit."
If the client actually did pay the dividend last month then it is
already 'legit', it only remains for the dividend to be recorded as
such. Presumably the client will have evidence of payment of the
dividend in the form of either the cheque paid to himself or a record
of the cash outgoing. The client is your best evidence in saying that
"I paid this dividend to myself..." assuming that he is a
director/shareholder and able to properly declare the dividend.
However, I have to repeat, that is *not* what the OP said. He cannot
have declared a dividend unknowingly. He should not be persuaded to
back-date a dividend and he should not be persuaded to sign paperwork
which was created to pretend that a dividend had been declared when the
client's own words show that it was not declared. In short, the client
should not be lead into creating false evidence.
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| Re: Tax year balls-up [message #382752 ] |
Di, 18 April 2006 21:22 |
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On 18 Apr 2006 06:32:57 -0700, "Troy Steadman"
<troysteadman [at] yahoo.co.uk> wrote:
>Tim wrote:
>> "Martin" wrote
>> > ...
>> > The OP spoke of "wanting to make a payment". Making
>> > a payment is not the same as declaring a dividend.
>>
>> Of course.
>>
>> "Martin" wrote
>> > And this is the crux. Declaring a dividend
>> > is not something which is done in writing.
>> > The declaration is the taking of the decision...
>>
>> Whilst true, I don't believe that is the "crux".
>> The crux of the matter is that the OP
>> *didn't* make the decision before 6 April...
>>
>> I think the biggest clue is in the OP's phrase:
>> "What I would like to do (or to have done already)..."!!
>
>I must say I am very much enjoying this clash between Accountants A and
>B:
>
>Accountant A works for the Revenue. Since you can get the same advice
>from the HMRC Help Line it is debatable whether Accountant A is an
>accountant at all. Using his client's words to crucify them, should
>ensure that nobody gives him any information in the future, so the
>resultant accounts will be as wrong as wrong can be. No wonder he has
>plenty of practice at dealing with an "angry" HMRC!
>
>Accountant B works for his client. His client can be up front with him,
>because he knows Accountant B will use the information carefully, in a
>balanced manner. Accountant B wants his client to pay as little tax as
>possible and will bend any rule to achieve that.
>
>Can you imagine any other profession taking this stance, Tim?
>
>DOCTOR: "When you came in you said you had indigestion. You actually
>have colonic cancer, but I'm treaing you with Rennies".
>
If the evidence is that the client has colonic cancer why should the
doctor take notice of someone who is wrong?
>LAWYER: "Gentlemen of the jury, I must first of all confirm that my
>client has admitted to me privately that he has a morbid interest in
>firearms. However he denies involvement in the shooting..."
Only communications between clients and lawyers - solicitors and
barristers - are subject to legal professional privilege.
You seem to be wanting to ignore the provisions of the Proceeds of
Crime Act 2002.
--
Peter Saxton from London
peter [at] petersaxton.co.uk
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| Re: Tax year balls-up [message #382755 ] |
Mi, 19 April 2006 00:14 |
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"Peter Saxton" <peter [at] petersaxton.co.uk> wrote in message
news:e3ea421a2kk3k300d667n6217aq07ruats [at] 4ax.com...
> On Tue, 18 Apr 2006 18:17:20 GMT, "Martin"
> <ngng [at] ngngng.BARRIER.fsnet.co.uk> wrote:
>
>>
>>"SandalsMan" <jbenator [at] gmail.com> wrote in message
>>news:1145380737.563635.78800 [at] e56g2000cwe.googlegroups.com...
>>> >Can you imagine any other profession taking this stance, Tim?
>>>
>>> Can you imagine any other profession, Tim, where the professional might
>>> advise his client to commit a fraudulent act, even though the client
>>> may not recognise it as such, but the professional surely should?
>>>
>>
>>I would expect the professional to dig down for the facts. Starting with
>>"When did you decide you wanted to pay a dividend?" That is not the same
>>as
>>assuming such a decision wasn't made until the OP thought "Gosh - how do I
>>pay this if I haven't yet received and cleared a client's cheque?"
>>
>>At no point has the OP mentioned "declaring" a dividend. It would be
>>unprofessional not to ask if (a) he did so, and (b) when.
>>
>>As a matter of interest (and, in a sense, to repeat Troy's point of
>>several
>>days ago), what response would you give to a client who says "I paid this
>>dividend to myself last month. Please would you do whatever is necessary
>>to
>>make it legit." If s/he couldn't recall the date and time of the
>>declaration, would you treat the payment as a loan (potentially taxable
>>and
>>reportable to HMRC), a salary (potentially taxable and reportable to
>>HMRC),
>>a dividend (potentially taxable and reportable to HMRC) or theft (not
>>taxable nor reportable to HMRC, but potentially reportable to NCIS).
>>
>>You will be aware, of course, of how HMRC would treat the payment.
>
> I would go for a dividend.
Correct.
> Are you saying the dividend was paid in
> cash (or goods!)?
No - I'm simply saying that the OP's silence on the issue of a declaration
is not proof that a declaration was not made.
> If not I would have thought there would be evidence
> of at least the payment date. Paying a dividend would imply that the
> client decided to pay a dividend.
Precisely. Which then brings us to the question of Director's Loan
accounts. Almost by definition, these are made up (in the book-keeping
sense, not the invention sense!) after the event.
If a div was declared, to be paid on a specified date, but no payment
actually happened on that date, then the Director's account would
_subsequently_ be adjusted to reflect that.
--
Martin
[Remove barrier to reply]
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| Re: Tax year balls-up [message #382756 ] |
Mi, 19 April 2006 00:14 |
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"Peter Saxton" <peter [at] petersaxton.co.uk> wrote in message
news:mjea42lki6n1h15hj2dudljtqalf4ktpav [at] 4ax.com...
<snip>
>
>>LAWYER: "Gentlemen of the jury, I must first of all confirm that my
>>client has admitted to me privately that he has a morbid interest in
>>firearms. However he denies involvement in the shooting..."
>
> Only communications between clients and lawyers - solicitors and
> barristers - are subject to legal professional privilege.
But note the provision applicable to accountants and their clients vis a vis
money laundering, wef 21/2/06
--
Martin
[Remove barrier to reply]
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| Re: Tax year balls-up [message #382757 ] |
Mi, 19 April 2006 00:14 |
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"SandalsMan" <jbenator [at] gmail.com> wrote in message
news:1145388196.584958.281490 [at] e56g2000cwe.googlegroups.com...
> >As a matter of interest (and, in a sense, to repeat Troy's point of
> >several
>>days ago), what response would you give to a client who says "I paid this
>>dividend to myself last month. Please would you do whatever is necessary
>>to
>>make it legit."
>
> If the client actually did pay the dividend last month then it is
> already 'legit'
And what evidence would you expect to see to show that the payment was a
dividend?
>, it only remains for the dividend to be recorded as
> such.
Recorded how? Do you mean minuting the declaration?
> Presumably the client will have evidence of payment of the
> dividend in the form of either the cheque paid to himself or a record
> of the cash outgoing.
Or an entry in the D's current / loan account.
> The client is your best evidence
Precisely.
> in saying that
> "I paid this dividend to myself..." assuming that he is a
> director/shareholder and able to properly declare the dividend.
> However, I have to repeat, that is *not* what the OP said.
We all know that. He didn't even mention the word "declare".
> He cannot
> have declared a dividend unknowingly.
Who says?
> He should not be persuaded to
> back-date a dividend and he should not be persuaded to sign paperwork
> which was created to pretend that a dividend had been declared
Agreed.
> when the
> client's own words show that it was not declared.
He has not said that. His post was silent on the subject of declaring a
dividend. He was asking about _paying_ it. You're treating as fact things
which haven't been said. Note that in his post the OP was assuming the
payment date was critical. He appears not to have understood the
significance of a declaration nor the funciton of a Director's Loan /
Current account.
> In short, the client
> should not be lead into creating false evidence.
No quarrel with that (except you meant "led"). The point is that a
professional should check out the facts thoroughly. There is nothing in the
OP which conflicts with the notion that the Director decided to pay a
dividend, got pre-occupied for a few days, then puzzled about "what am I
going to pay the div with?". It may not be what happened, and prima facie
it wasn't. But it could have been.
--
Martin
[Remove barrier to reply]
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| Re: Tax year balls-up [message #382773 ] |
Mi, 19 April 2006 14:21 |
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On Tue, 18 Apr 2006 22:14:10 GMT, "Martin"
<ngng [at] ngngng.BARRIER.fsnet.co.uk> wrote:
>
>"Peter Saxton" <peter [at] petersaxton.co.uk> wrote in message
>news:e3ea421a2kk3k300d667n6217aq07ruats [at] 4ax.com...
>> On Tue, 18 Apr 2006 18:17:20 GMT, "Martin"
>> <ngng [at] ngngng.BARRIER.fsnet.co.uk> wrote:
>>
>>>
>>>"SandalsMan" <jbenator [at] gmail.com> wrote in message
>>>news:1145380737.563635.78800 [at] e56g2000cwe.googlegroups.com...
>>>> >Can you imagine any other profession taking this stance, Tim?
>>>>
>>>> Can you imagine any other profession, Tim, where the professional might
>>>> advise his client to commit a fraudulent act, even though the client
>>>> may not recognise it as such, but the professional surely should?
>>>>
>>>
>>>I would expect the professional to dig down for the facts. Starting with
>>>"When did you decide you wanted to pay a dividend?" That is not the same
>>>as
>>>assuming such a decision wasn't made until the OP thought "Gosh - how do I
>>>pay this if I haven't yet received and cleared a client's cheque?"
>>>
>>>At no point has the OP mentioned "declaring" a dividend. It would be
>>>unprofessional not to ask if (a) he did so, and (b) when.
>>>
>>>As a matter of interest (and, in a sense, to repeat Troy's point of
>>>several
>>>days ago), what response would you give to a client who says "I paid this
>>>dividend to myself last month. Please would you do whatever is necessary
>>>to
>>>make it legit." If s/he couldn't recall the date and time of the
>>>declaration, would you treat the payment as a loan (potentially taxable
>>>and
>>>reportable to HMRC), a salary (potentially taxable and reportable to
>>>HMRC),
>>>a dividend (potentially taxable and reportable to HMRC) or theft (not
>>>taxable nor reportable to HMRC, but potentially reportable to NCIS).
>>>
>>>You will be aware, of course, of how HMRC would treat the payment.
>>
>> I would go for a dividend.
>
>Correct.
>
>> Are you saying the dividend was paid in
>> cash (or goods!)?
>
>No - I'm simply saying that the OP's silence on the issue of a declaration
>is not proof that a declaration was not made.
>
He wasn't silent. He'd made it clear that he hadn't decided.
>> If not I would have thought there would be evidence
>> of at least the payment date. Paying a dividend would imply that the
>> client decided to pay a dividend.
>
>Precisely. Which then brings us to the question of Director's Loan
>accounts. Almost by definition, these are made up (in the book-keeping
>sense, not the invention sense!) after the event.
>
>If a div was declared, to be paid on a specified date, but no payment
>actually happened on that date, then the Director's account would
>_subsequently_ be adjusted to reflect that.
I don't think anyone is disagreeing with that but I don't see the
relevance. I thought the discussion was about deciding to declare a
dividend but dating it before the decision is made.
--
Peter Saxton from London
peter [at] petersaxton.co.uk
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| Re: Tax year balls-up [message #382786 ] |
Mi, 19 April 2006 19:16 |
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"Peter Saxton" <peter [at] petersaxton.co.uk> wrote in message
news:rlac42pl1764a1nb2864klmj9nc5tamgs5 [at] 4ax.com...
<snip>
>>No - I'm simply saying that the OP's silence on the issue of a declaration
>>is not proof that a declaration was not made.
>>
> He wasn't silent. He'd made it clear that he hadn't decided.
Ah - but that's the point. He _was_ silent on the matter of a
"declaration" - but clearly is (and for all we know has been of a little
while) keen to pay a dividend. So it is possible he had decided to pay a
dividend but is suddenley hesitating because he believes (rightly or
wrongly) that the timing of the payment may be a problem.
His post was all about the payment, not about the declaration. No-one else
seems to have realised that.
>>If a div was declared, to be paid on a specified date, but no payment
>>actually happened on that date, then the Director's account would
>>_subsequently_ be adjusted to reflect that.
>
> I don't think anyone is disagreeing with that but I don't see the
> relevance. I thought the discussion was about deciding to declare a
> dividend but dating it before the decision is made.
Yes - I think the discussion is precisely about that. But my contention
throughout is that the "decision" (which _is_ the "declaration") may have
pre-dated 6/4.
Meanwhile, the OP has doubtless toddled off and had the matter sorted! So
maybe we should move on too...
--
Martin
[Remove barrier to reply]
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| Re: Tax year balls-up [message #382787 ] |
Mi, 19 April 2006 19:23 |
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>I don't think anyone is disagreeing with that but I don't see the
>relevance. I thought the discussion was about deciding to declare a
>dividend but dating it before the decision is made.
Exactly Peter. As I have said before, Martin's answer appears to be to
throw confusion where there is none in the hope of deflecting the
argument. It might appear to be clever but it is a dangerous game when
one might be faced with the new Revenue & Customs Prosecution Office
who are looking for nice easy cases to make the headlines!
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| Re: Tax year balls-up [message #382788 ] |
Mi, 19 April 2006 19:45 |
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>> He cannot
>> have declared a dividend unknowingly.
>Who says?
I say so! The OED definition of declare is "Announce openly or
formally (declare war; declare a dividend)" How can the director have
announced (either openly or formally) a dividend to himself by only the
most fleeting of thoughts, without actually creating any evidence
whatsoever, and without actually telling anyone about it at that time?
A thought is not an announcement either formally or openly. And, let us
not forget that in the case in question the OP has accepted that he had
neither decided to declare nor pay a dividend by 11 April 2006.
Putting the potential for criminal prosecution aside (which I think is
very real should the OP be persuaded to collude with his adviser in
creating false documents which could result in a tax advantage) then
would you, Martin, like to take the OP before the General or Special
Commissioners for cross examination by Revenue Experts or by Counsel
based upon what we know? I certainly would not because I think it
would be a waste of his money. He would pretty quickly admit that he
didn't know how to declare a dividend and, even if he did, then he had
not done it by 5 April, and even if he said he had (despite his posting
on the internet on 11 April), he would have no contemporaneous evidence
to show for it. OK he may be able to produce minutes etc produced
after 11 April purporting to show that a dividend had been declared
earlier, but experienced Revenue people would soon sniff that out. I
certainly would not rate his chances before the Commissioners.
How can you possibly say that any professional is acting in the best
interests of his client in those circumstances? You really are relying
on smoke and mirrors Martin.
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| Re: Tax year balls-up [message #382789 ] |
Mi, 19 April 2006 19:51 |
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"SandalsMan" <jbenator [at] gmail.com> wrote in message
news:1145467422.313442.200470 [at] z34g2000cwc.googlegroups.com...
> >I don't think anyone is disagreeing with that but I don't see the
>>relevance. I thought the discussion was about deciding to declare a
>>dividend but dating it before the decision is made.
>
> Exactly Peter. As I have said before, Martin's answer appears to be to
> throw confusion where there is none in the hope of deflecting the
> argument. It might appear to be clever but it is a dangerous game when
> one might be faced with the new Revenue & Customs Prosecution Office
> who are looking for nice easy cases to make the headlines!
Er - I somehow don't see RCPO (responsible for prosecuting some of the UK's
largest criminal cases involving drug smuggling, money laundering and tax
fraud) will get terribly excited about a one-man Ltd Coy getting its
paperwork a bit muddled. Normal HMRC inspections / enquiries / settlements
regime deal with that kind of thing.
How many OMLCs do you really imagine have all the correct documentation on
file supporting divs, or the range of other transactions which make up the
minutiae of their every day lives? My guess is well under 25%.
I'm sorry if you think I'm trying to be clever. It's simply that in my
business it's vital to ascertain the facts before jumping to conclusions.
That is nothing to do with fraud, cooking the books, falsifying documents or
what have you.
--
Martin
[Remove barrier to reply]
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| Re: Tax year balls-up [message #382791 ] |
Mi, 19 April 2006 20:03 |
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"SandalsMan" <jbenator [at] gmail.com> wrote in message
news:1145468756.536627.325340 [at] j33g2000cwa.googlegroups.com...
>>> He cannot
>>> have declared a dividend unknowingly.
>
>>Who says?
>
> I say so! The OED definition of declare is "Announce openly or
> formally (declare war; declare a dividend)" How can the director have
> announced (either openly or formally) a dividend to himself by only the
> most fleeting of thoughts, without actually creating any evidence
> whatsoever, and without actually telling anyone about it at that time?
> A thought is not an announcement either formally or openly.
No dictionary definition overrides the legal definition of what constitutes
"declaring a dividend".
> And, let us
> not forget that in the case in question the OP has accepted that he had
> neither decided to declare nor pay a dividend by 11 April 2006.
I think I've finally realised what's happened. I've only seen the first
post from the OP ("barry"?). Could I ask you please to paste and repost his
follow up where he evidently talks about declaring (or not) a dividend.
> Putting the potential for criminal prosecution aside (which I think is
> very real should the OP be persuaded to collude with his adviser in
> creating false documents which could result in a tax advantage) then
> would you, Martin, like to take the OP before the General or Special
> Commissioners for cross examination by Revenue Experts or by Counsel
> based upon what we know?
Of course not. That's why I kept saying we don't yet "know" I thought
folk were jumping to conclusions. But your repost will clarify that for me.
TIA.
--
Martin
[Remove barrier to reply]
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| Re: Tax year balls-up [message #382793 ] |
Mi, 19 April 2006 20:18 |
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>Er - I somehow don't see RCPO (responsible for prosecuting some of the UK's
>largest criminal cases involving drug smuggling, money laundering and tax
>fraud) will get terribly excited about a one-man Ltd Coy getting its
>paperwork a bit muddled. Normal HMRC inspections / enquiries / settlements
>regime deal with that kind of thing.
Sorry Martin but here you really are out of touch! Yes, according to
their website RCPO do handle some of the largest criminal cases. But
they also handle the smaller ones too! In fact they handle all
prosecution work on behalf of HMRC, large and small.
Yes, many cases are handled by what is known as the Code 9 procedure
which aims to reach a financial settlement, but HMRC and RCPO are also
on the lookout for prosecution cases too across the board, not just the
larger cases. They have to be seen to be pursuing a proportion of all
cases not just large ones, otherwsie smaller cases would know that they
are safe from prosecution. There is no guarantee that any particular
case will be handled under Code 9.
I accept that the documentation may be deficient in many cases.
However where a professional adviser has colluded with his client in
producing false documentation the risk of prosecution (or at least
investigation with a view to criminal prosecution) is very much
greater. As a professional adviser I would not wish to lead (spelt
properly this time) my client into any risk whatsoever of prosecution,
let alone put myself in the frame. No client is worth that, with due
respect, of course, to the OP.
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| Re: Tax year balls-up [message #382794 ] |
Mi, 19 April 2006 20:32 |
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>No dictionary definition overrides the legal definition of what constitutes
>"declaring a dividend".
Well please do tell us Martin, what is the legal definition and where
is it found?
>Could I ask you please to paste and repost his
>follow up where he evidently talks about declaring (or not) a dividend.
I think we are all now losing sight of what the OP said, but this is
the extract I think you need:
"The point would be if we were to now declare a dividend of say =A36,000
per share (2 shares), and date it March 31st 2006, but not pay it
until today, 12 April 2006, then the dividend would fall into tax year
2006-2007, for which I am anticipating earnings above the 40% bracket.
If a loan note/IOU dated March 31st 2006 were acceptable as a form of
payment of the dividend and not viewed badly by IR
AND
The paperwork would all be dated March 31st 2006, but the money would
not be paid until today (or later). The money would not start moving
until 2006-2007 tax year."
END
At this point I think that even I am losing the will to live!
He is still talking about *declaring* a dividend on 12 April 2006, not
about *having declared* a dividend.
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| Re: Tax year balls-up [message #382798 ] |
Mi, 19 April 2006 21:24 |
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On 19 Apr 2006 11:32:25 -0700, "SandalsMan" <jbenator [at] gmail.com>
wrote:
>>No dictionary definition overrides the legal definition of what constitutes
>>"declaring a dividend".
>
>Well please do tell us Martin, what is the legal definition and where
>is it found?
>
>>Could I ask you please to paste and repost his
>>follow up where he evidently talks about declaring (or not) a dividend.
>
>I think we are all now losing sight of what the OP said, but this is
>the extract I think you need:
>
>"The point would be if we were to now declare a dividend of say £6,000
>per share (2 shares), and date it March 31st 2006, but not pay it
>until today, 12 April 2006, then the dividend would fall into tax year
>2006-2007, for which I am anticipating earnings above the 40% bracket.
>
>If a loan note/IOU dated March 31st 2006 were acceptable as a form of
>payment of the dividend and not viewed badly by IR
>
> AND
>
>The paperwork would all be dated March 31st 2006, but the money would
>not be paid until today (or later). The money would not start moving
>until 2006-2007 tax year."
>
>END
>
>At this point I think that even I am losing the will to live!
>
>He is still talking about *declaring* a dividend on 12 April 2006, not
>about *having declared* a dividend.
Seems pretty conclusive to me.
--
Peter Saxton from London
peter [at] petersaxton.co.uk
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| Re: Tax year balls-up [message #382812 ] |
Do, 20 April 2006 02:04 |
|
"SandalsMan" <jbenator [at] gmail.com> wrote in message
news:1145471545.231791.140020 [at] z34g2000cwc.googlegroups.com...
>No dictionary definition overrides the legal definition of what constitutes
>"declaring a dividend".
###### How come in the course of 14 minutes your postings have switched from
plain/text to quoted -printable - thereby supressing the "echo" signs >>> in
my OE6?
Well please do tell us Martin, what is the legal definition and where
is it found?
###### This is the point I was making previously. "Declaring" the div is
what happens at the meeting which makes that decision. In a "one director"
(or "one member") Ltd Coy the "meeting" doesn't involve saying anything to
anybody. The documenting of what the one person has decided, after the
event, is simply minuting the decision that was made. I know it sounds
weird, but you'll also know that provision is made not merely for one person
to do this alone, but even for the dispensing with AGMs by elective
resolutions etc.
###### As a totally irrelevant aside, this all puts me in mind of the
frequent morning news reports about some politician or another who "will be
announcing later today that..."
>Could I ask you please to paste and repost his
>follow up where he evidently talks about declaring (or not) a dividend.
I think we are all now losing sight of what the OP said, but this is
the extract I think you need:
"The point would be if we were to now declare a dividend of say £6,000
per share (2 shares), and date it March 31st 2006, but not pay it
until today, 12 April 2006, then the dividend would fall into tax year
2006-2007, for which I am anticipating earnings above the 40% bracket.
If a loan note/IOU dated March 31st 2006 were acceptable as a form of
payment of the dividend and not viewed badly by IR
AND
The paperwork would all be dated March 31st 2006, but the money would
not be paid until today (or later). The money would not start moving
until 2006-2007 tax year."
END
##### Where did you get that from?!!!!!! I genuinely thought I had seen the
OP's only post - my request that you re-post was very much tongue in cheek
at best, and grossly sarcastic at worst. This is news to me. My arguments
all along have been based entirely on what I believed to be his original and
only post - in which the term "declared" never appeared. But evidently this
quote is from a follow-up. Which basically means my argument is totally
bu**ered.
##### Mind you, I think it was valid in its context
At this point I think that even I am losing the will to live!
##### How do you think I now feel :-(
He is still talking about *declaring* a dividend on 12 April 2006, not
about *having declared* a dividend.
##### So he posted this the next day...?! Any chance I can blame Bill
Gates or NTL, or shall I just fetch my coat now?
##### Anyway, I concede unreservedly. Sorry we've been at cross purposes
all this time - mea culpa. Good chat though - thanks.
--
Martin
[Remove barrier to reply]
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| Re: Tax year balls-up [message #382823 ] |
Do, 20 April 2006 10:16 |
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On Thu, 20 Apr 2006 00:04:46 GMT, "Martin"
<ngng [at] ngngng.BARRIER.fsnet.co.uk> wrote:
>
>"SandalsMan" <jbenator [at] gmail.com> wrote in message
>news:1145471545.231791.140020 [at] z34g2000cwc.googlegroups.com...
>>No dictionary definition overrides the legal definition of what constitutes
>>"declaring a dividend".
>
>###### How come in the course of 14 minutes your postings have switched from
>plain/text to quoted -printable - thereby supressing the "echo" signs >>> in
>my OE6?
>
>Well please do tell us Martin, what is the legal definition and where
>is it found?
>
>###### This is the point I was making previously. "Declaring" the div is
>what happens at the meeting which makes that decision. In a "one director"
>(or "one member") Ltd Coy the "meeting" doesn't involve saying anything to
>anybody. The documenting of what the one person has decided, after the
>event, is simply minuting the decision that was made. I know it sounds
>weird, but you'll also know that provision is made not merely for one person
>to do this alone, but even for the dispensing with AGMs by elective
>resolutions etc.
>
>###### As a totally irrelevant aside, this all puts me in mind of the
>frequent morning news reports about some politician or another who "will be
>announcing later today that..."
>
>>Could I ask you please to paste and repost his
>>follow up where he evidently talks about declaring (or not) a dividend.
>
>I think we are all now losing sight of what the OP said, but this is
>the extract I think you need:
>
>"The point would be if we were to now declare a dividend of say £6,000
>per share (2 shares), and date it March 31st 2006, but not pay it
>until today, 12 April 2006, then the dividend would fall into tax year
>2006-2007, for which I am anticipating earnings above the 40% bracket.
>
>If a loan note/IOU dated March 31st 2006 were acceptable as a form of
>payment of the dividend and not viewed badly by IR
>
> AND
>
>The paperwork would all be dated March 31st 2006, but the money would
>not be paid until today (or later). The money would not start moving
>until 2006-2007 tax year."
>
>END
>
>
>##### Where did you get that from?!!!!!! I genuinely thought I had seen the
>OP's only post - my request that you re-post was very much tongue in cheek
>at best, and grossly sarcastic at worst. This is news to me. My arguments
>all along have been based entirely on what I believed to be his original and
>only post - in which the term "declared" never appeared. But evidently this
>quote is from a follow-up. Which basically means my argument is totally
>bu**ered.
>
>##### Mind you, I think it was valid in its context
>
>At this point I think that even I am losing the will to live!
>
>##### How do you think I now feel :-(
>
>He is still talking about *declaring* a dividend on 12 April 2006, not
>about *having declared* a dividend.
>
>##### So he posted this the next day...?! Any chance I can blame Bill
>Gates or NTL, or shall I just fetch my coat now?
>
>##### Anyway, I concede unreservedly. Sorry we've been at cross purposes
>all this time - mea culpa. Good chat though - thanks.
Sometimes I will post a message and *I* don't even get a copy
downloaded even though I would have expected it to be downloaded from
the server I uploaded to. It must be there because other people reply
to it.
--
Peter Saxton from London
peter [at] petersaxton.co.uk
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| Re: Tax year balls-up [message #382827 ] |
Do, 20 April 2006 11:51 |
|
"Peter Saxton" <peter [at] petersaxton.co.uk> wrote in message
news:nnge42p62uc3ajk2utck1h6sfgkrj6j077 [at] 4ax.com...
<snip>
>
> Sometimes I will post a message and *I* don't even get a copy
> downloaded even though I would have expected it to be downloaded from
> the server I uploaded to. It must be there because other people reply
> to it.
>
Really? I've never been aware of not getting posts - though in its
inimitable way, NTL goes through phases of sending everything twice - a few
days apart :-(
--
Martin
[Remove barrier to reply]
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| Re: Tax year balls-up [message #382871 ] |
Do, 20 April 2006 18:37 |
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>###### How come in the course of 14 minutes your postings have switched from
>plain/text to quoted -printable - thereby supressing the "echo" signs >>> in
>my OE6?
I don't know, Martin, nothing has chaged at this end.
>###### This is the point I was making previously. "Declaring" the div is
>what happens at the meeting which makes that decision. In a "one director"
>(or "one member") Ltd Coy the "meeting" doesn't involve saying anything to
>anybody. The documenting of what the one person has decided, after the
>event, is simply minuting the decision that was made.
I accept all of that. But the whole point is, because it was a one man
meeting (if there was such a meeting) any other evidence that a
dividend was or was not 'declared' becomes all the more important to
such cynical people as those at HMRC. A one man meeting creates
neither evidence nor witnesses so it is incredibly easy to write
minutes some time later with no fear of contradiction by those who were
there or were recorded as being there. HMRC will therefore look to
other evidence, where the date of the meeting is crucial to the amount
of tax payable, to show whether or not the decision/declaration was
made on that date. Such evidence might be the date of engagement of
experienced professionals, the receipt of advice from a professional,
relevant correspondence and, yes, a posting on the internet. If any of
that evidence casts doubt on whether the dividend was declared when it
was supposed to have been declared HMRC will use that to challenge the
declaration of the dividend and deny the tax advantage. At the very
least they will take it before the Commissioners and, if collusion is
involved, they may refer the matter to RCPO.
Out of interest, is there a legal definition of how a dividend is
declared anywhere? Or are we relying on normal usage of the words?
>##### Where did you get that from?!!!!!! I genuinely thought I had seen the
>OP's only post - my request that you re-post was very much tongue in cheek
>at best, and grossly sarcastic at worst. This is news to me.
Well that gave me the best laugh this year! I did wonder how you knew
there was a second posting without seeing it, but I didn't waste too
much time trying to figure it out. I shall resist the temptation to
look back at your own postings where I seem to remember you saying
something several times along the lines of "it is vital that a
professional should ascertain the facts before jumping to conclusions"
or stronger.
>##### Mind you, I think it was valid in its context
Do you ever give up Martin? I can see why you think that your argument
may have had some validity in the context of only the original posting
but you could still have led the OP into some difficult times with HMRC
and costing him some significant amounts of both accountancy and legal
fees, in addition to putting him at risk of a knock from RCPO.
>##### So he posted this the next day...?! Any chance I can blame Bill
>Gates or NTL, or shall I just fetch my coat now?
Yes he did. Try using Google Groups (groups.google.co.uk). I have
never had any problems with them.
>##### Anyway, I concede unreservedly. Sorry we've been at cross purposes
>all this time - mea culpa. Good chat though - thanks.
Accepted graciously. It has been fun. Thank you!
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| Re: Tax year balls-up [message #382907 ] |
Fr, 21 April 2006 09:03 |
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SandalsMan wrote:
>
########### ...switches on deafening static...###########
>
> Do you ever give up Martin? I can see why you think that your argument
> may have had some validity in the context of only the original posting
> but you could still have led the OP into some difficult times with HMRC
> and costing him some significant amounts of both accountancy and legal
> fees, in addition to putting him at risk of a knock from RCPO.
>
######### Huh? What's that?
######### It's funny how Martin only has a problem with your
posts...Hello?...Hello?...
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