Tax experts are warning businesses that the taxman is cracking down on bosses who don’t keep their dividend paperwork up to date.
Many directors pay themselves with a mixture of dividends and salary and do not pay national insurance on the dividends.
However, the Inland Revenue believes it is losing out on national insurance contributions when bosses claim that payments were dividends but don’t have the right records to prove it.
Martin Johnson, partners at our Sunderland office, says that bosses must make sure their filing is accurate:
“Whenever dividends are made bosses must formally declare them immediately. It sounds daft but even if it’s a one man meeting, the Revenue could still ask for board minutes.
“If the documents aren’t there the Revenue will argue payments aren’t dividends at all but a salary and bosses will be hit by hefty income tax and national insurance bills.”
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