Dividend vouchers

[Gyumri]

I am looking for the legal reference that requires a dividend payment to a shareholder to be evidenced by a dividend voucher, which usually sets out the date, name of company, name of the shareholder, amount of dividend etc. It is said that a copy of each dividend voucher must be kept by the company, but where in the Companies Act 2006 or elsewhere does it set out such a legal requirement ?

 

[WaveJumper]

Have a look at this link and scroll down too the heading:

ultra vires and illegal dividends

CTM15205 - Distributions: general: dividends, distributions and company law - HMRC internal manual - GOV.UK

www.gov.uk

 

[numbersrule]

A comprehensive guide to dividend vouchers UK

Uncover the essentials of dividend vouchers in the UK in our comprehensive guide. Understand their importance and their tax implications.

www.mjkane.co.uk

 

[numbersrule]

A comprehensive guide to dividend vouchers UK

Uncover the essentials of dividend vouchers in the UK in our comprehensive guide. Understand their importance and their tax implications.

www.mjkane.co.uk

So it seems UK Law does not specifically require Dividend Vouchers. However they are strongly recommended as good practice.

 

[fisicx]

So it seems UK Law does not specifically require Dividend Vouchers. However they are strongly recommended as good practice.

Not what it says here:

Running a limited company: your responsibilities

Running a limited company - including directors' responsibilities, company annual returns, reporting company changes and how to take money out of a limited company.

www.gov.uk

 

[MyAccountantOnline]

I am looking for the legal reference that requires a dividend payment to a shareholder to be evidenced by a dividend voucher, which usually sets out the date, name of company, name of the shareholder, amount of dividend etc. It is said that a copy of each dividend voucher must be kept by the company, but where in the Companies Act 2006 or elsewhere does it set out such a legal requirement ?

I stand to be corrected but I dont believe you will find anywhere in the CA 2006 which states you must issue a dividend voucher.

It could be argued that they are required in accordance with section 388 https://www.legislation.gov.uk/ukpga/2006/46/section/388

Section 248 and 249 also set out the requirements for minutes which you'd need to pay a dividend

 

[IanSuth]

I had to provide dividend vouchers as evidence to the student loan company - some organisations now only provide an electronic equivalent but the SLC hasn't caught up yet and for their past year adjustment purposes they only wanted paper - in the end they accepted a print off that was scanned into a pdf to be uploaded ot their evidence portal !!!

As those electronic only organisations were large companies I think this is another "we went paperless over covid but the world hasn't caught up" moments

 

[Gyumri]

Have a look at this link and scroll down too the heading:

ultra vires and illegal dividends

CTM15205 - Distributions: general: dividends, distributions and company law - HMRC internal manual - GOV.UK

www.gov.uk

Thanks - that's my bed time story book which doesnt provide the answer!

 

[Gyumri]

So it seems UK Law does not specifically require Dividend Vouchers. However they are strongly recommended as good practice.

Thanks for your input along with others. That seems to be the reason - its just a record evidencing a payment, but with a fancy name.

 

[WaveJumper]

Turns out to be quite an interesting topic and may have already been covered by others above, but further Googling around last night I came up with this, I thought the last paragraph interesting:

Are dividend vouchers a legal requirement?​

Although dividend vouchers are not required by law in the UK, they are highly recommended. By providing a formal record of dividend payments, these vouchers play an important role in financial transparency and fulfil the company’s legal obligation to keep accurate records.

Additionally, dividend vouchers serve as physical proof of income for shareholders, protecting their rights as valued stakeholders in the company.

What are the tax implications of dividend vouchers? ​

Like most good things in life, dividends come with tax implications. The UK offers a tax-free dividend allowance, and after this, dividend tax is payable. The tax rate on dividends varies based on your total income and tax bracket – something a good accountant (such as ourselves!) can help you to calculate.

Shareholders must receive dividend vouchers from companies when dividends are declared. If a company fails to provide these vouchers, HMRC can consider the payments as salary, resulting in tax and national insurance obligations. That’s why it is in both the company’s and shareholders’ best interests for these documents to be produced and properly recorded.

 

[eteb3]

Not what it says here:

Running a limited company: your responsibilities

Running a limited company - including directors' responsibilities, company annual returns, reporting company changes and how to take money out of a limited company.

www.gov.uk

GOV.UK is usually crap on the law: they give broad brush guidance and never reference the underlying legislation. I’d never trust it except on that rough and ready basis.

This must be policy, because it’s so consistent across many departments and agencies.

For free, comprehensive info, HMRC and Land Registry manuals can’t be beat (imvho)

 

[numbersrule]

Not what it says here:

Running a limited company: your responsibilities

Running a limited company - including directors' responsibilities, company annual returns, reporting company changes and how to take money out of a limited company.

www.gov.uk

This .gov / HMRC guidance is aimed at tax payers in order to ensure that they can provide HMRC with the paperwork that HMRC sometimes expects.

But I agree with eteb3, that doesn't mean it is UK Law.

 

[Elasticrock]

This is pretty handy reading with stuff I'm currently sorting out! Does anyone know if I can retrospectively issue the vouchers after the payments have been made, say when I'm doing my accounts or do they need to be issued at the time of payment?

 

[Newchodge]

This is pretty handy reading with stuff I'm currently sorting out! Does anyone know if I can retrospectively issue the vouchers after the payments have been made, say when I'm doing my accounts or do they need to be issued at the time of payment?

That is a question often debated!

The proper way is that you cannot re-write history. If money was transferred from a limited company to the sole shareholder/director, without any paperwork (meeting minutes, record of distributable profit and decision on dividend to be paid) or payroll reporting, it was transferred as a loan.

I am aware that some accountants are happy to backdate both payroll and dividend declaration. My view is both are unlawful and, potentially, fraudulent.

 

[Elliot Green]

I am looking for the legal reference that requires a dividend payment to a shareholder to be evidenced by a dividend voucher, which usually sets out the date, name of company, name of the shareholder, amount of dividend etc. It is said that a copy of each dividend voucher must be kept by the company, but where in the Companies Act 2006 or elsewhere does it set out such a legal requirement ?

The usual procedure would be minutes of the meeting showing the resolution approving the dividend otherwise what evidence would there be as to the creation of the relevant transaction?

You might be able to rely in the case of a solvent company upon ratification in Section 239 of the Companies Act 2006.