When can I take divs - Invoice date or payment date

[contractor55]

many thanks to all

[northernladuk]

Absolutely - if the cash isn't in the bank don't spend it

Even if the cash isn't in the bank it doesn't mean you can spend it. Some of it belongs to HMRC.

[contractor55]

Situation

pay div`s every 1/4

• All invoices have been sent to agency : 3 months worth
• Invoices been paid say 2 months so far due to payment details - 30 days behind
• The amount of money in the company account is enough to pay the 3 months divs in full without needing the all the invoices to be paid

The "Missing/ Yet to be paid " payments will pay for the subsequent Corp tax`s for the same period - all VAT have already been transferred to another holding account

Based upon this since all invoices have been sent and I have enough money in the company account to pay out the full 3 x month div amount - Can I pay myself the div`s at the end of the 3 months rather then wait for the full payments

[northernladuk]

Situation

pay div`s every 1/4

• All invoices have been sent to agency : 3 months worth
• Invoices been paid say 2 months so far due to payment details - 30 days behind
• The amount of money in the company account is enough to pay the 3 months divs in full without needing the all the invoices to be paid

The "Missing/ Yet to be paid " payments will pay for the subsequent Corp tax`s for the same period - all VAT have already been transferred to another holding account

Based upon this since all invoices have been sent and I have enough money in the company account to pay out the full 3 x month div amount - Can I pay myself the div`s at the end of the 3 months rather then wait for the full payments

If you were to pay these Div's do you have enough in the bank to cover everything owed to the tax man? Corp, VAT etc? If not then no you cannot, it is not profit. If you have their money, your divi's and money to spare in there then yes.

Oh yeah and don't forget a warchest. Do you intend to give yourself every possible penny so have no warchest and also paying top dollar tax on the amount you withdraw?

[lje]

Situation
Based upon this since all invoices have been sent and I have enough money in the company account to pay out the full 3 x month div amount - Can I pay myself the div`s at the end of the 3 months rather then wait for the full payments

What happens if the agency goes out of business and doesn't pay your third invoice even though they have received money from the client? How are you going to pay your Corp Tax then? I always make sure that I have the money in my bank account and that I have subtracted the tax due before I take a dividend.

[Wanderer]

What happens if the agency goes out of business and doesn't pay your third invoice even though they have received money from the client? How are you going to pay your Corp Tax then? I always make sure that I have the money in my bank account and that I have subtracted the tax due before I take a dividend.

I agree that the best strategy is to take the dividend out of paid invoices but there is nothing to stop you raising an invoice and paying a dividend at the same time according to the PCG website.

If an invoice is never paid, it gets written off as a bad debt and this amount gets subtracted from your company profit so it all balances out. If that unpaid invoice was the last one your company ever issued then you are probably going to have to pay the dividend back or risk being accused of trading while insolvent.

[psychocandy]

Always wondered if theres any wisdom in only paying dividends once a quarter (like proper companies do) rather than once a month? Surely once a month makes it look like a salary.

Or dont HMRC care?

[ASB]

Always wondered if theres any wisdom in only paying dividends once a quarter (like proper companies do) rather than once a month? Surely once a month makes it look like a salary.

Or dont HMRC care?

How would HMRC know whether you pay quarterly, annually or even twice a day ? They wouldn't until they are already investigating.

Though a lot of folk do take the view that paying once a month is a greater risk. Just ensure they are correctly minuted and paperwork is properly in order. Personally I pad them at fairly random frequencies - i.e. when I personally needed the cash.