HMRC has written to company owners who it believes may have failed to declare dividend income.

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HMRC is writing to company owners from 4 February 2024 to inform them that they may have underdeclared dividend income. This is based on the company’s reserves, which its accounts show have fallen despite the company making profits, suggesting that a dividend has been paid out.  

HMRC has asked the recipient of the letter to either report any undeclared dividend income or tell HMRC if there is no further income to declare. 

If the recipient has dividend income to declare, HMRC advises they should use an online disclosure facility. The online service requires the user to register for the facility. They will then be sent a payment reference number (PRN) in the post. The same online service is used to pay anything owed, including interest and penalties. Payment should be made within 90 days of receiving the PRN. However, the letter does not make reference to other means of reporting undeclared income to HMRC, such as the contractual disclosure facility, which might be more appropriate in cases of tax fraud. 

If the recipient believes they have no additional income to declare, they can advise HMRC of this via the telephone number or e-mail address provided.  

The letter also advises that if the recipient does not respond, HMRC may open a compliance check and charge higher penalties. 

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