Starting on 4 February 2024, HMRC is writing to company owners regarding the potential underdeclaration of dividend income.

The correspondence is prompted by a decrease in company reserves despite reported profits, hinting at undisclosed dividend payouts.

Recipients are urged to acknowledge the letter by either disclosing any unreported dividend income or confirming no additional income exists. For those with undeclared income, HMRC recommends utilising an online disclosure facility.

The process involves registering, receiving a payment reference number (PRN) by mail, and using the same online platform to settle dues, encompassing interest and penalties, within 90 days of receiving the PRN.

The letter does not mention alternative reporting avenues like the contractual disclosure facility, which is more suitable for instances of tax fraud. If recipients assert that they have no additional income, they can communicate this to HMRC via the provided telephone number or email.

Failure to respond may lead to HMRC initiating a compliance check, potentially resulting in heightened penalties. This outreach once again reiterates the importance of prompt and accurate income reporting.

Get in touch about your personal tax obligations.