HMRC eyes potentially underdeclared dividend income

HMRC is using its data analytic powers to contact taxpayers where it thinks there’s a chance that income has been overlooked.

What it’s interested in is income from distributions or dividends. It has been looking at company accounts, and where it has identified a large drop in the profit and loss account reserves, which might suggest payment of a distribution or dividend, it has been writing to taxpayers to ask them to check that any such income has been declared on their self assessment tax returns. It does not necessarily follow that tax is owing in such cases. It may be, for example, that any such dividend or distribution was covered by the personal allowance or Dividend Allowance.

It is, however, always important to take notice of correspondence of this type from HMRC, and act within the timescale indicated. This letter, for instance, advises that failure to respond may open the door to a compliance check by HMRC, with the potential for higher levels of penalties for any non compliance.

Newsletter May 2024