Ltd company advice

[dave1]

Hi there can't reach my accountant any my year end is near.

Last years accounts I had drawn to much on dividends so they moved £2000 over onto this financial year they have told me that the £2000 needs to be sat in the account at the point of the year end. What happens to the money that's sat there when my new financial year starts can it be spent. Thanks

 

[Iron Giant]

@Part Timer is your man

 

[Part Timer]

Hi there can't reach my accountant any my year end is near.

Last years accounts I had drawn to much on dividends so they moved £2000 over onto this financial year they have told me that the £2000 needs to be sat in the account at the point of the year end. What happens to the money that's sat there when my new financial year starts can it be spent. Thanks

@Part Timer is your man

I would think it could be but I'd advise waiting till you get their advice. What I don't understand is how did you draw to much on dividends.

 

[Part Timer]

Hi there can't reach my accountant any my year end is near.

Last years accounts I had drawn to much on dividends so they moved £2000 over onto this financial year they have told me that the £2000 needs to be sat in the account at the point of the year end. What happens to the money that's sat there when my new financial year starts can it be spent. Thanks

But how, the only way you can take too much money out of your business with dividends is if you're company can't afford it and you, as a Director, jeopardise it's liquidity, and can therefore lose the Limited liability aspect, or you have gone into the 40% bracket. Very strange your Accountant has given you this advice if it doesn't fall into either one of these.

 

[stevo1]

I'm guessing you didn't leave enough in the bank to pay your cooperation tacmx hence why they've moved it across to the next year

 

[P4dstar]

I think I can see what he’s saying here. You leave the 2k in the account and that will be profit. You then need to pay corporation tax and THE COMPANY can spend what is left.

If you imagine you were working for a large company but you were responsible for paying yourself. Last year you took an additional £2k. You have been told this needs to be returned this year. He moved the monies into this financial year so they you weren’t taxed on non existent monies. So essentially you’ve started this financial year, personally, £2k down. Whatever you would normally earn you need to take 2k less (in theory, many accountants seem to make up their own rules)

Don’t stress about it being the end of the year. Surely you’ve time before your submission is due? I imagine it’s due the end of Jan? That poses another problem though. If it is due the end of Jan we’re talking about a different tax year.

 

[Part Timer]

I think I can see what he’s saying here. You leave the 2k in the account and that will be profit. You then need to pay corporation tax and THE COMPANY can spend what is left.

The company would pay corporation tax on the dividends anyway as they're not an expense

 

[P4dstar]

The company would pay corporation tax on the dividends anyway as they're not an expense

Yeah that’s what I’m thinking. First put the 2k back into the bank. Then pay corporation tax on it. Then whatever is left can be taken as a dividend or spent by the company?