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Where Taxpayers and Advisers Meet

Taxed on dividends never received

petergrant01
Posts:3
Joined:Wed May 04, 2016 12:14 pm
Taxed on dividends never received

Postby petergrant01 » Wed May 04, 2016 12:22 pm

Hi,

My wife's previous partner was an IT consultant and had his own company on which he paid himself a salary and dividends.

My wife recently found out (via HMRC) that during the period they were together he had put her down as a 50% shareholder of his IT company and subsequently removed her when they broke up. None of this was known to her at the time.

HMRC have now contacted her asking for £30k of unpaid dividend taxes as they assume that as she was down as a 50% shareholder in Companies House that she received the dividends. She didn't received a penny.

Key Points:
- She was made a shareholder (and removed) without her knowledge or consent
- She never received a penny of the dividends.
- In theory she'd be happy to sue him for the dividends and then pay the tax but she doesn't want to accept that she's entitled to it or be chased by HMRC for unpaid tax in the meantime.

In our view it's tax fraud as he did this with the sole intention of him not paying tax and he presumably paid the dividends to himself as she saw nothing.

What should we do??

Peter

wamstax
Posts:2019
Joined:Wed Aug 06, 2008 3:39 pm
Location:Operate Nationally but based in Aberdeen
Contact:

Re: Taxed on dividends never received

Postby wamstax » Wed May 04, 2016 2:08 pm

This needs careful handling as clearly the ex might seek to prove that she knew all about it and that she in fact knew about and received her dividends share. You may of course also be up against another tax adviser who inspired the "tax fraud" and may therefore have an interest in "covering up the true facts".

I am afraid also that you need to come to the table with a completely fresh set of eyes and ensure that what you are being told are the true facts and not how it is now remembered when when HMRC have come a calling.

The starting point must of course be to examine all relevant matters - and as far as you are able given that you do not act for the company - including the nature of the dividends( interim or final) - all and any paperwork that was created to show the relevant dividends and the manner in which and timing when your client was contended to have received the dividends.

This is not an easy one to deal with and could come down to your clients word against others.
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact (mob 07751720507) can be obtained from websites

wamstax
Posts:2019
Joined:Wed Aug 06, 2008 3:39 pm
Location:Operate Nationally but based in Aberdeen
Contact:

Re: Taxed on dividends never received

Postby wamstax » Wed May 04, 2016 2:12 pm

There is of course nothing to stop you writing to the company advising that HMRC have advised your client that she received dividends and in order to assist your consideration please provide all and any paperwork that was created at the relevant time to show the receipt of the dividends by your client and her knowledge of such sums being received.
You could also hint that if the dividends have not actually been paid yet then your client would be pleased to receive a cheque for the full amount to prevent legal action being considered. Your further consideration would them depend on what you end up getting by way of information and/or paperwork.
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact (mob 07751720507) can be obtained from websites

petergrant01
Posts:3
Joined:Wed May 04, 2016 12:14 pm

Re: Taxed on dividends never received

Postby petergrant01 » Wed May 04, 2016 2:20 pm

Thanks for your reply. I think it will ultimately be a case of asking them to show that the dividends were paid and evidence of this which they will not be able to provide. My wife has provided bank statements for the period to HMRC showing she never received the payment but of course it's not definitive proof.

If the dividends weren't paid but we ask (sue) the company for them then can the HMRC chase her for them BEFORE she's received them from the company? ie We're just concerned that it may take longer to recover them from the company and we'll have to pay the tax in the meantime.

petergrant01
Posts:3
Joined:Wed May 04, 2016 12:14 pm

Re: Taxed on dividends never received

Postby petergrant01 » Wed May 04, 2016 2:23 pm

Is this something we could take to a 'no-win no fee' solicitor? The problem is we don't have any money or desire to spend money chasing this however the amount owed (if we were paid) is in the region of £170k so it's a decent amount.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Taxed on dividends never received

Postby bd6759 » Wed May 04, 2016 4:43 pm

Your first stop should be Companies House to see what documents were filed with them.

If your partner was given a share (even if it was unbeknownst to her) she would be the legal owner of the share and this would be recorded at CH. If that were the case, and CH no longer have her recorded as a shareholder, someone must have forged a document showing that she transferred the shares. You could then refer the matter to the police because fraud is a criminal, not a civil, matter.

You will also need to consider that HMRC are following the ownership of shares from CH. They will note the transfer and consider whether capital gains tax applies to that disposal.

You need to speak with a solicitor. You may qualify for legal aid,

SteLacca
Posts:448
Joined:Fri Aug 07, 2015 2:17 pm

Re: Taxed on dividends never received

Postby SteLacca » Mon Jul 11, 2016 9:15 am

To be honest, my first question would be did they have separate bank accounts, or a joint account. If separate accounts, do her bank statements bear out the fact that no dividends were paid? If so, prove that to HMRC and let them worry about the ex.

dr gonzo
Posts:1
Joined:Thu Aug 04, 2016 12:15 pm

Re: Taxed on dividends never received

Postby dr gonzo » Thu Aug 04, 2016 12:24 pm

You cannot know for sure that she did not 'receive' any dividends. They may have been credited to a participators loan account in the company, in which case the dividends are legally paid (and as such taxable). The fact that she was married to the other party would also mean that it would have been permissible to have a joint loan account with her husband, so in theory the dividends could have been paid, then drawn by him in the same way that had they had a joint bank account he could have perfectly legally withdrawn all of her wages/monetary gifts from parents/etc that she may have paid in to the account.

SteLacca
Posts:448
Joined:Fri Aug 07, 2015 2:17 pm

Re: Taxed on dividends never received

Postby SteLacca » Tue Sep 13, 2016 9:07 am

Really? Settlements legislation, anyone.


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