The Benefits of a Phone Answering Service
For many businesses, the telephone is the main way of meeting customers. But as business grows, not every company has the time or money to invest in their own call
Dividend Waivers
What is a dividend waiver?
A waiver is where one or more shareholders decide to waive their rights to be paid a dividend. Every shareholder is entitled to be paid in relation to the number of shares they hold.
To avoid the distribution being challenged by HMRC a number of procedures should be followed:
- Ensure the Deed of Waiver is formally executed and signed by shareholders who would be entitled to receive the share income.
- Prior to the right to receive a dividend arises, ensure the waiver is in place.
- A waiver should only be used for genuine commercial reasons.
- A waiver must not create a situation where the dividend can be seen as a ‘settlement’ and therefore used for tax avoidance.
Dividend waivers are only effective if executed by deed because there is no consideration to support a contract.
Recent CIOT guidance explains that the drafting, preparation, and execution of deeds is a ‘reserved activity’ under the Legal Services Act 2007. This can only be carried out by an authorised or exempt person. As a result, all waivers/deeds must be drafted by lawyers.
