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Are your dividends legal?

04-June-2015

HMRC would try to treat a dividend as illegal (insufficient profits) and assess tax and interest if you have not followed the correct procedures. To avoid this print a quick profit and loss account before the dividend is declared. Assuming there is enough profits (after providing for tax [currently 20%]) then prepare the dividend minutes and voucher and pay the dividend. Retain all the paperwork. So, if the company becomes insolvent at a later period you would be able to prove the dividends paid prior to this were indeed declared and legal.