DWT and illegal dividend

dbran

Hi

Does anyone know if a company is required to pay DWT on a dividend which is termed as illegal under Company law ie it is greater then the companies total realised profits.

Thanks and regards

dbran

nompere

I dunno, the moderator of the accountancy forum, and a man in the trade. You're the one supposed to be answering these questions, not asking them!!

Serious mode on.

This is mostly a question for m'learned friends, but UK Revenue have considered it at some length, and I think the questions are mostly answered in this document:

http://www.hmrc.gov.uk/manuals/ctmanual/ctm20095.htm

I don't think Irish company law on this is significantly different to that in the UK.

If the recipient is within the category at para 30 then I think you must pay the DWT, and the recipient might be entitled to a repayment. That would depend on the particular circumstances.

On the other hand a recipient within para 29 is not entitled to a repayment of tax, and is actually under an obligation to repay the purported dividend. So I don't think it can be a relevant distribution within the meaning of S. 172A TCA 1997. It follows that you shouldn't pay the DWT. I foresee very difficult questions and answers with the Revenue Commissioners as you seek to explain why the money was paid and you have advised them not to pay any DWT.

dbran

Thanks Nompere. Just the info I was looking for.

Kind regards

dbran