Working and Cild Tax Credit and Company Dividend

[maxi1967]

Hi, I have been a company director in a firm for the last 6 years and we recieve a basic and a dividend, I rang the tax credit helpline and explained that I do not pay income tax on the dividend the company pays corporation tax! They said I did not need to include it? I didn't.... I rang a further 4 times and was told by a manager that I should not include it! I still didn't, I rang 2 years ago and a girl questioned my low income but I told her I receive dividend and she was satisfied! This year I got a letter saying they were conducting a review and I sent in my P60 and payslips. I duly received my reward as normal. A friend of mine in a similar position has just been interviewed in a police station under caution! and told he owes £30,000!!! Mine will be similar I imagine so I again rang the helpline and was told I should include them I gave the guy my forecast for this year and an estimate for last year. My partner then rang the help desk and he was told he didn't need to include them!!! I cannot believe the helpdesk can have so much variance!!! I rang them again and explained it thoroughly and the lady went and spoke to her manager (I got both there names!)and come back and said I did not need to declare them! Unbelievable!!! I have written a letter with all this in but I am at my wits end because I may owe £30,000 plus any help from anyone that has been through this would be very grateful.

[mullet]

I find it hard to believe that people in HMRC (and their managers) dealing with tax credits would give out incorrect information on so basic an issue. I am almost ignorant of tax credits as I don't get them, but a quick scan of the Tax Credits Technical Manual reveals the following:

TCTM04002
Calculate and then add together
the pension income (see TCTM04300)
the investment income (see TCTM04500),
the property income (see TCTM04006),
the foreign income (see TCTM04007) and
the notional income (see TCTM04800)
of the claimant, or, in the case of a joint claim, of the claimants.

TCTM04501 [Investment income includes ...]
Dividends and other distributions of a company resident in the UK and the accompanying tax credit

Also, just from a logical perspective, a company director can choose to take a low salary with the rest of their income as divendends. Imagine the absurdity of someone on £100K per annum declaring £5,000 as income and getting tax credits, with £95,000 dividends disregarded. It doesn't make sense.

What sort of figures are we talking about in your case?

[maxi1967]

Hi, firstly thank you for your reply. I can assure you the conversations I have had with the help desk are REAL! My figures are no were near £100k but as they have been going on for 6 years they do add up! £32,000 was the biggest dividend and down to £11,000 this year projected.

[towat]

From memory, until about 2 years ago there was no box on the Tax Credit Form for dividends, and it was common practice not to include them, rightly or wrongly.

Then last year I believe, the form changed and a box appeared to include dividends from your own company.