Have Tax Questions? Ask a Tax Expert for Answers ASAP
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.
Dividends are payable per share and must be approved by appropriate meetings. What exactly is this 'certificate?' At this stage the whole matter sounds decidedly fishy.
What are the funds with HMRC (CIS)? This would indicate that an external contractor in the building trade has been involved working for the company. This is becoming more and more complex by the minute.
This is incorrect, CIS applies only to individuals working in the construction industry. The first thing to do is to go the the company's customers and demand full settlement of invoices. The fact that the customer has placed money with CIS is their their problem to recover.
What is this 'certificate' please?
The dividend is taxable in the leaving director hands less the first 5\k which is tax free. HMRC will have to bill him for the sum involved and you should tip them off to that effect. The remaining shareholder should have been similarly taxed on their 20K. The whole thing is a gigantic mess and all but fraudulent. I would tent to put this whole matter in the hands of a local, trusted solicitor to advise and arrange recovery proceedings. The police are unlikely to be terribly interested in these sorts of shenanigans.
Then you must both settle your liabilities with HMRC and hope that they do not use their usual unhelpful approach to individuals trying to sort out a mess.
Write to HMRC explaining what has happened and asking for guidance as to how the tax which should have been deducted from the dividends should be settled. You will have to tell that Department your erstwhile partners name and address.