Dividend on Liquidation

[CazzieB]

Hoping the liquidators on the forum can help and shed some light on this

Client received a pay-out from Thomas Cook, it says its a dividend, but has had tax (40%) & NI stopped
Liquidating dividend is not usually taxable, as return on investment (but maybe CGT)

Any ideas why Tax & NI were deducted from the "Dividend" as the letter says it comes under Rules 14.35

 

[Elliot Green]

Hoping the liquidators on the forum can help and shed some light on this

Client received a pay-out from Thomas Cook, it says its a dividend, but has had tax (40%) & NI stopped
Liquidating dividend is not usually taxable, as return on investment (but maybe CGT)

Any ideas why Tax & NI were deducted from the "Dividend" as the letter says it comes under Rules 14.35

Was the client a former employee with a claim in respect of arrears under an employment contract ?

 

[CazzieB]

Was the client a former employee with a claim in respect of arrears under an employment contract ?

Yes Pilot, but also had shares. The letter says its a dividend

 

[Elliot Green]

Yes Pilot, but also had shares. The letter says its a dividend

Based on what you have said it appears *likely* the dividend was in respect of a debt claim from an employment contract. It is *unlikely* it was a dividend arising from him or her holding shares.

 

[CazzieB]

Based on what you have said it appears *likely* the dividend was in respect of a debt claim from an employment contract. It is *unlikely* it was a dividend arising from him or her holding shares.

Thank you, seems it does come under PAYE, even though it keeps calling it a dividend

 

[Scalloway]

I think in this case a dividend refers to the proportion of the debt that is being paid out to creditors as this section of the Insolvency rules seems to imply.

The Insolvency Rules 1986

These Rules set out the detailed procedure for the conduct of all company and individual insolvency proceedings in England and Wales under the Insolvency Act 1986 and otherwise give effect to that Act. The insolvency proceedings concerned are—company voluntary arrangements (Part 1 of the...

www.legislation.gov.uk

 

[Lisa Thomas]

I agree with the others. The term 'dividend' is being used as a payment to creditors, rather than a dividend to shareholders.

 

[Frank Wessely]

I agree with the others. The term 'dividend' is being used as a payment to creditors, rather than a dividend to shareholders.

I also agree.

For what it is worth to others reading this thread, my firm uses the term "dividend" when paying monies out to creditors and "distribution" when paying a return of capital to shareholders. Most other IPs do likewise to the best of my knowledge.

Thanks.