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HMRC targeting undeclared dividend payments

HMRC have advised the Chartered Institute of Taxation (CIOT) that they have commenced a ‘One to Many’ letter campaign directed at taxpayers who HMRC suspect may need to declare income from distributions or dividends.

The letter sending process commenced on 5 February 2024.


Who might be targeted?

HMRC have looked at company accounts and are contacting taxpayers where they have identified a large drop in profit and loss account reserves. This indicates that individuals may have received a distribution or dividend from the company but not declared it on their self-assessment tax return.


What does the letter say?

The letter, a copy of which can be found here, provides 30 days for the taxpayer to respond.

It asks the recipient to check their self-assessment returns to make sure that any income from share distributions and dividends has been declared and says that if this has not been done, there may be some tax due.


What do I do if I need to declare some income?

If on reviewing your tax return, you decide that you need to declare some income you need to let HMRC know within 30 days.

To do this you need to follow the steps below:

  1. Go to the government website page ‘tell HMRC about underpaid tax from previous years’ and then follow the instructions. HMRC will then write to you with a payment reference number (PRN).
  2. When you receive your PRN, use the dame online service declare your income and pay anything you owe, including any interest and penalties. You must do this within 90 days of receiving your PRN.


What is I do not need to declare any income?

Even if you believe that you have no income to declare, you still need to respond to the letter.

You can call HMRC on 0300 123 0998 or email ISBC.OnshoreDisclosures@hmrc.gov.ukletter


Our advice

If you receive a letter, you need to respond within 30 days regardless of whether you have income to declare.

Before you respond to HMRC, we suggest that you contact us or your tax advisor.

If you fail to respond, HMRC may open a compliance check and charge higher penalties. Penalties charged can be as much as the same amount of tax due if wrong amounts have been submitted, plus interest is charged per day for any late payments.

If you need our advice get in touch at enquiries@cowgills.co.uk


The information was correct at time of publishing but may now be out of date.

Posted by Cowgills
7th February, 2024
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