Dividend declaration for company in liquidation

[DLA001]

Hi,

A company went into liquidation and year end accounts for that year were not submitted to HMRC due to liquidation. Draft accounts were prepared by accountant in haste to prvide to liquidator. No objection is raised by liquidator on draft accounts so far. I want to find out that what dividend amount should director declare to HMRC on his SA? OR do they wait till conclusion of liquidation before decalring it?

Thanks

 

[Lisa Thomas]

I assume this is an insolvent liquidation, not a Members Voluntary (solvent) liquidation?

 

[DLA001]

It is CVL

 

[Elliot Green]

Why would the director declare a dividend to HMRC ?

 

[UK Contractor Accountant]

Why would the director declare a dividend to HMRC ?

Because they have been paid dividends for 24/25 tax year - illegal or otherwise

 

[Elliot Green]

Because they have been paid dividends for 24/25 tax year - illegal or otherwise

This is however draft accounts, so if for example, there is no evidence of the dividend being declared, then it might not perhaps be a dividend.

 

[DLA001]

Accountant offset reserves against DLA as dividends. No dividend vouchers were issued and all accounts were prepared in less than two days to meet deadline to place in cvl before high court hearing for wind up petition.

Now question arise are these legal dividends as these are mere entries by accountant. If they are then do I use offset amount as the amount declared as dividend in self assessment tax return or do I wait till conclusion of liquidation to see the final amount they confirm as dividend?

By the way, it is related to 23/24 SA. It is already 5 months late

 

[Elliot Green]

Was a dividend ever declared?

 

[DLA001]

There is an entry in ledger offsetting DLA against dividend. The amount claimed by liquidator for DLA is the amount after dividend was offset. This is the only declaration there but as it was done in haste so no thought was given to it in terms of dividends being issued or not.

 

[Elliot Green]

A ledger entry is not necessarily a position that elevates to a declaration as such.

 

[UK Contractor Accountant]

Draft accounts were prepared by accountant in haste to prvide to liquidator.

looks like the company was already in liquidation when the fudge up of dividends to DLA was actioned.

The Director had no powers to authorise interim or final dividends after the appointment of the Liquidator

 

[UK Contractor Accountant]

Manolete Partners plc v Rutter & Anor [2022] EWHC 2552 (Ch); [2022] BTC 31​

High Court of Justice

Judge Tindal

Judgment delivered 7 October 2022

Dividends – Dividend made by way of accounting offset against directors’ loan accounts – Dividend recorded in company accounts but not recorded in underlying accounting records until later – Whether dividend made when accounts approved or when underlying accounting records re-aligned with accounts – Dividend made when accounts approved.

​

 

[Elliot Green]

looks like the company was already in liquidation when the fudge up of dividends to DLA was actioned.

The Director had no powers to authorise interim or final dividends after the appointment of the Liquidator

Looks like it was before Liquidation.

 

[UK Contractor Accountant]

Looks like it was before Liquidation

year end accounts maybe but not the draft accounts post the last year end date?

 

[Elliot Green]

year end accounts maybe but not the draft accounts post the last year end date?

It says all accounts were two days before.

 

[Elliot Green]

Manolete Partners plc v Rutter & Anor [2022] EWHC 2552 (Ch); [2022] BTC 31​

High Court of Justice

Judge Tindal

Judgment delivered 7 October 2022

Dividends – Dividend made by way of accounting offset against directors’ loan accounts – Dividend recorded in company accounts but not recorded in underlying accounting records until later – Whether dividend made when accounts approved or when underlying accounting records re-aligned with accounts – Dividend made when accounts approved.

​

Judge appears to make a finding of fact. It doesn't appear to be a statement of law that the declaration arises from the accounts; it appears the judge found that the accounts filed were more reliable than the Sage records.

 

[UK Contractor Accountant]

Draft accounts were prepared by accountant in haste to prvide to liquidator

It says all accounts were two days before.

bit conflicting that?

Only the OP knows the true facts.

 

[DLA001]

Accounts were prepared to help liquidator place the company in CVL. Draft accounts were provided before the formal date company was placed in liquidation.

I am thinking of not declaring the amount but adding a note that dividends amount is not known and updated SA will be provided once liquidation is concluded and exact amount known. Will this be acceptable by HMRC?

 

[UK Contractor Accountant]

Will this be acceptable by HMRC?

just tick the box that says provisional (Box 20 on TR8) and provide info in the white space of the Return

 

[DLA001]

Thanks