Urgent: divorce and tax return!

[Waitthenwhat]

Can someone please offer some quick advice/help. I have recently filed for divorce but I am still a secretary on my soon to be ex limited company. What would happen if he take out dividends on my name? Would I still be liable for tax?

Yes, but you will also be due the money taken out. If he declares a dividend and doesn't give you your due portion, he's stealing from you, and that will look extremely bad at court (for him).

That’s interesting because throughout the marriage I have never received the money. The dividend doesn’t always find its way to the joint account either! He spends on us the bare minimum and I usually contribute 1/2 towards outgoings from my permanent salary but I am also left dealing with huge tax returns bills, sometimes even mistakes from his accountant! :(

You definitely need some professional help with this. I can try and provide a few pointers though.

Who was taking care of your personal tax returns in the years these dividends were being declared? Do you have an HMRC login? If you do, get in and get copies of your tax returns and copies of any self assessment payments made because you're going to need them as evidence.

I'm going to assume your DH made you a 'sleeping' shareholder and divided up the withdrawals from the business in such a way that was tax efficient and using both of your basic rate tax bands. This can be totally proper and legal, but if the money was not transferred to you in full (which would include to a joint account) then he has stolen or withheld money from you which you would be owed.

If he set up this arrangement solely to increase his own income, this is what HMRC can call a "settlement" – www.taxinsider.co.uk/settlements-cause-for-concern-ta – it's quite technically complex, but the basic idea is that HMRC take a dim view of spouses creating artificial constructs in order to reduce the tax paid. What HMRC can do is then force the higher earner to pay the difference! Knowledge of this stuff may come in very handy when "negotiating" with your DH because if HMRC do open an investigation, he could come under a lot of scrutiny for how he's set things up.

Oh, and while the above doesn't necessarily help with any immediate HMRC related cashflow problems you may be having, HMRC does have mechanisms by which you can contact them and come to a temporary arrangement regarding payments of debts (even if those debts are ultimately overturned or changed). It's best to be as open with them as you can and set a payment plan up now, even for a modest amount, than wait for it all to come out later.

Thank yous o much Brenda, that’s super useful. So when you say professional help, do I need to get help from an accountant or from a lawyer? It’s very frustrating as I have filed my divorce paperwork (he wants to defend it!!) and he admitted that he has withdrawn £8 dividend on my name so far this year (I haven’t seen it and don’t know anything about it!). All calculations of tax return etc have been done by his accountant; I have spoken with the accountant and have details of amounts taken out on my name throughout the years. More evidence for when we get to the financial settlement bit!

Having a separate accountant you can trust would be a good start but ultimately this might come down to your divorce lawyer if you have one since they’ll use this as both a demonstration of financial control (?) and be able to get to the bottom of what extra you are owed in the settlement. You could do it yourself but I appreciate it might seem a bit overwhelming with everything else a divorce entails!

Thank you so much @BrendaBubbles, I have passed on this info to my divorce lawyer. The financial settlement is likely to be v messy!