HMRC hunts for undeclared dividends
HMRC campaign. From time to time HMRC runs campaigns to identify where it might be losing tax as a result of oversights, errors or avoidance by taxpayers. It’s recently started a campaign to identify lost tax on dividend income. This will mainly target shareholders of small companies.
Are you at risk? HMRC is choosing its targets by using information in company accounts where it appears money might have been received by shareholders and which apparently has not been reported as dividends on their personal self-assessment returns.
Letter from the Taxman. HMRC is sending letters to those it thinks might not have declared dividends. If you receive such a letter, you have the option to report any dividends that have not been shown on your tax returns or confirm that you have nothing further to declare.
Tip. Don’t ignore HMRC’s letter, even if you have nothing to declare. HMRC may go away in the short term but in the longer term it might up the ante by starting an investigation. If you have overlooked reporting dividend income, we recommend using HMRC’s voluntary disclosure process which you can access online (see The next step ). Naturally, if you haven’t omitted anything from your tax returns you should confirm this to HMRC without delay.
For a link to HMRC’s disclosure process, visit https://www.tips-and-advice.co.uk , Download Zone, year 24 issue 10.