Proof of payment of dividends

[mouseorgan]

Hi,

I am a 50% shareholder in my company with my wife who I am divorcing. I have been drawing dividends and paying them into a joint bank account, access to which she voluntarily surrendered when she moved out. Since she moved out I have been transferring her a fixed monthly amount to live on into her own private bank account. This figure pretty much matches the dividends issued in her name, and will exceed them by the time I need to draw another dividend.

Given that I have a full audit trail of business bank account payments into a joint account, and then transfers out again, is this not concrete proof that she has had these dividends, and there is no business perspective to address here at all?

She maintains this money is NOT the dividends, but separate child maintenance costs (which were only agreed purely informally pending divorce), but to me, it's clear the dividends are used as a mechanism to provide her that money. And IF they weren't deemed to be the same money, then surely whatever I've given her is still dividends and she can claim missed child maintenance (as her demand for all these dividends undermines the figures I would have otherwise have based child maintenance on IYSWIM) as a personal issue, utterly unrelated to the business.

if she says I owe her dividends, and I say I have... then what? Either way the money has left the business and fully documented to have done so, so again... it's not a business issue, right?

(company is already being closed, etc.)

Thanks

[amcdonald]

You have continued to produce dividend vouchers I assume ?

[mouseorgan]

You have continued to produce dividend vouchers I assume ?

My accountant has continued to issue them, yes. I have not passed them to her, nor looked at them myself tbh, if that matters.

[amcdonald]

Since she moved out I have been transferring her a fixed monthly amount to live on into her own private bank account. This figure pretty much matches the dividends issued in her name, and will exceed them by the time I need to draw another dividend

It looks like you're saying that you can't easily match up the dividend vouchers to actual payments matching those vouchers

That's the crunch, I think you need to speak to your accountant.

If you're a PCG member now would be a time to phone the legal helpline and get a second opinion

[mouseorgan]

It looks like you're saying that you can't easily match up the dividend vouchers to actual payments matching those vouchers

That's the crunch, I think you need to speak to your accountant.

If you're a PCG member now would be a time to phone the legal helpline and get a second opinion

Actual payments from the business bank account, yes I can match them up 100%.

Yeah. PCG. Good point!

[northernladuk]

Surely if you are paying dividends into an account she no longer has access to HMRC will view that as you paying yourself the full dividend as you alone get the benefit from them so will tax you accordingly?

If you are paying her dividends you have to be super clean to make sure she gets what is legally hers. Personally I would have thought entering in to this arrangements paying in to a joint account would have been best avoided anyway?

I would have thought it would be in your best interests to clean this up immediately. You are going to be a world of tulip if she decides to report you to HMRC.

[eek]

Surely if you are paying dividends into an account she no longer has access to HMRC will view that as you paying yourself the full dividend as you alone get the benefit from them so will tax you accordingly?

If you are paying her dividends you have to be super clean to make sure she gets what is legally hers. Personally I would have thought entering in to this arrangements paying in to a joint account would have been best avoided anyway?

I would have thought it would be in your best interests to clean this up immediately. You are going to be a world of tulip if she decides to report you to HMRC.

+1 you seem to have confused a tax avoidance issue with your actual payments.

Paying her dividends into an account she hasn't got access to is a no no she hasn't received those dividends. HMRC will probably have a field day when they find out.

Secondly you seem to have confused child payments with those dividend payments. the items are entirely separate. What you pay her has nothing to do with what the company should have paid her.

I would get some legal advice quickly but I don't think its going to be pleasant news or reading

[northernladuk]

If you plan on shutting the company down and her dividend payments just stop she is going to go ballistic. It would be hard to imagine that she wouldn't be on the phone to HRMC and anyone else that might listen to try and either continue payments or to make sure you don't get anything more, even if it costs her.

[mouseorgan]

+1 you seem to have confused a tax avoidance issue with your actual payments.

Paying her dividends into an account she hasn't got access to is a no no she hasn't received those dividends. HMRC will probably have a field day when they find out.

Secondly you seem to have confused child payments with those dividend payments. the items are entirely separate. What you pay her has nothing to do with what the company should have paid her.

I would get some legal advice quickly but I don't think its going to be pleasant news or reading

Well legally / technically she did have access - the joint account was in both of our names - she could have requested access from the bank, and she has had that money paid on to her.

I don't think I'm confusing the payments, but I would contend that deliberately providing an income via means of dividends is a reasonable way to cover the costs and then some. I cedrtanily admit that other interpretations say that there could be a difference, but then that's for the CSA etc... and a personal matter.

I'm certainly keen to tidy it up, but her view of tidying it up is to demand all the money in the dividends (including money she lived on before she moved out) so its' not something I can just clear up from that angle without voluntarily destroying myself as she's not cooperative.

[mouseorgan]

If you plan on shutting the company down and her dividend payments just stop she is going to go ballistic. It would be hard to imagine that she wouldn't be on the phone to HRMC and anyone else that might listen to try and either continue payments or to make sure you don't get anything more, even if it costs her.

I'm not planning on stopping paying her. I've long been trying to remove her shares and then paying her from a larger dividend I'm paying myself - a solution that would clearly cost me more in tax.