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dividends payments log??

liveprincessliveprincess Well-KnownRegistered Posts: 214
in General accounting discussion
Hello everybody. Sorry if this is a silly question but I hope one of our lovely MIPs could help me, please. Basically, my fiance set up a ltd company with 2 others. They pay themselves some directors salary and also dividends (every week its the same amount). They have an accountant who told them that there is a requirement to keep a log (diary?) of directors meetings when they decide how much dividends will be paid and when. Is this true or will a company bank statement be enough? If it is then what do they need to write in the log? Is there any standard wording that needs to be included? Do they need to record it every week or every month? I would really appreciate some help. Many thanks

Comments

  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,432
    edited December 2014
    Hi liveprincess,
    it is a requirement to hold a director's meeting to declare the dividends and to keep the minutes of the meeting. Each time a dividend is paid the company must issue a dividend voucher to each of the shareholder. Declaring dividends every week makes the paperwork quite cumbersome in your case!

    More info here.

    MN
  • JawzJawz New Member West MidlandsRegistered Posts: 53
    They could make a record of the initial meeting and payment in the format of a letter and get it signed by all directors to stipulate that such future payments to be made every week is for dividend and keep the document on file. That way, they wouldn't need to do it every week/month and I believe this will be sufficient to meet their dividend reporting requirement.

  • liveprincessliveprincess Well-Known Registered Posts: 214
    Thanks for your help to you both. I've found some templates online, they will only need to change the date so shouldn't be too much bother.
  • stevo5678stevo5678 Well-Known Cheltenham Registered Posts: 325
    edited December 2014
    Although the responses are technically correct in 14 years in practice I have never seen a dividend voucher for an owner managed company ever be required by any third party (Inc HMRC). It's just red tape.

    Owner of Ltd: I may pay myself a dividend this month as I have some profits in the bank.
    Owner of Ltd: You will need to have a meeting with the 'board' to make it official.
    Owner of Ltd: Has a meeting with self and writes out board minutes.

    It's just a joke if you ask me, in practice an Ltd Co 1 man band makes the decision on behalf of the board of one when he makes the payment and the rest is just paperwork...

    For the record all the firms I've worked at have been ACA firms and vary in size from 4-40 members of staff.
  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,432
    It may be red tape, however in my previous practice we have always issued dividend vouchers, even for OMB Ltd co.
    In the OP's case, I would stick to red tape as the same amount is paid weekly and HMRC could argue this is employment income. Better safe than sorry. :)
  • stevo5678stevo5678 Well-Known Cheltenham Registered Posts: 325
    Agreed better safe than sorry although the chances of being sorry are very very remote... :)
  • EllabobbinEllabobbin Feels At Home Registered Posts: 92
    Record keeping aside, I would have serious doubts over the wisdom of declaring a weekly dividend. It is simply asking for HMRC to declare it is really PAYE salary...
    MarieNoelle
  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,432
    Another suggestion would be to put the weekly amounts to director's loan account and clear the d'loan quarterly/ yearly by way of dividends when accounts are drawn and show there is sufficient reserves and profit to do so.
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