Do platforms notify HMRC of dividends paid to dealing accounts?

[Bouleversee]

I was told I no longer had to do tax returns as HMRC had all the information about me and when I said they surely didn't get informed of the certificated dividends I received which varied considerably from year to year, they said I could just write to them at the end of each year and tell them and also if I had any losses to claim. I should have thought they might be interested in any gains exceeding the allowance as well as will be the case in the current year. It seems building societies and banks have to notify HMRC of interest paid so I assumed the platform where I still have a few shares in a dealing account would also notify them so I only told them about the certificated dividends. However, they don't seem to have included the dealing account dividends in their tax calculation and say I don't owe them any tax as my divs. were within the allowance which would not be the case if the dealing account divs. were included and I think I owe them a small sum for last year, likely to be rather more in the current year as I still haven't got round to selling or ISA-ing the shares.

I reckon HMRC must be losing a lot of money to people who have taken them at their word when told they didn't need to send returns any more

[BullDog]

I could be wrong. But we have a self assessment tax return system in the UK. You self assess and if you have unreported income or gains, you're bound to do a tax return. The on line tax return now is so easy, it's not worth risking having undeclared income or gains if you know that to be the case. Despite the letter, I believe you are still required to tell them of undeclared income or gains.

[kempiejon]

I could be wrong. But we have a self assessment tax return system in the UK. You self assess and if you have unreported income or gains, you're bound to do a tax return. The on line tax return now is so easy, it's not worth risking having undeclared income or gains if you know that to be the case. Despite the letter, I believe you are still required to tell them of undeclared income or gains.

In 2019/20 I told HMRC, using a web chat portal, of my dividend income tax due, I filled my card details in online and all was settled. No tax return needed. The following year a similar thing. I'm now within the limts so no tax due, I see the web chat has been scrapped.

[BullDog]

I could be wrong. But we have a self assessment tax return system in the UK. You self assess and if you have unreported income or gains, you're bound to do a tax return. The on line tax return now is so easy, it's not worth risking having undeclared income or gains if you know that to be the case. Despite the letter, I believe you are still required to tell them of undeclared income or gains.

In 2019/20 I told HMRC, using a web chat portal, of my dividend income tax due, I filled my card details in online and all was settled. No tax return needed. The following year a similar thing. I'm now within the limts so no tax due, I see the web chat has been scrapped.

Yes I agree. I find the on line return so quick and easy to do I just do it.

[pje16]

Despite the letter, I believe you are still required to tell them of undeclared income or gains.

Correct as YOU are the one who signs and declares it is correct.
I used to have clients who thought their accountant was responsible for it - WRONG

[Lootman]

It seems building societies and banks have to notify HMRC of interest paid so I assumed the platform where I still have a few shares in a dealing account would also notify them so I only told them about the certificated dividends. However, they don't seem to have included the dealing account dividends in their tax calculation

Banks and building societies do issue annual tax certificates with the interest they paid you. Brokers also produce a certificate, with interest and dividends. They do not report disposals however. And the taxman will not know about divis from any certificated holdings, foreign-held securities and so on. Obviously you are expected to tell them about those, although if no tax is due anyway it may not be a big matter for them.

I do not know if the taxman assumes that you have no holdings if you report no dividends. Maybe not since you could hold only securities that have no yield.

I envy you not having to do a tax return annually. If I am willing to pay enough CGT I may get there one day.

[pje16]

I prefer to sleep easily every night

[swill453]

I was told I no longer had to do tax returns as HMRC had all the information about me and when I said they surely didn't get informed of the certificated dividends I received which varied considerably from year to year, they said I could just write to them at the end of each year and tell them and also if I had any losses to claim. I should have thought they might be interested in any gains exceeding the allowance as well as will be the case in the current year. It seems building societies and banks have to notify HMRC of interest paid so I assumed the platform where I still have a few shares in a dealing account would also notify them so I only told them about the certificated dividends. However, they don't seem to have included the dealing account dividends in their tax calculation and say I don't owe them any tax as my divs. were within the allowance which would not be the case if the dealing account divs. were included and I think I owe them a small sum for last year, likely to be rather more in the current year as I still haven't got round to selling or ISA-ing the shares.

HMRC will certainly have the right to get the dividend information from brokers, and indeed may get sent a big file containing the information.

But what they won't be doing is reconciling all of it with all of our tax accounts. This would be a massive data processing job, and doing it with only name/address/date of birth to go on would throw up so many exceptions that it would keep the entire civil service busy for years (since we're not obliged to give our brokers a unique reference like our NI number).

So they have the information to hand if they're motivated to do an investigation on someone, but they won't be doing it as a matter of course.

The same applies to bank interest.

Scott.

[Alaric]

HMRC will certainly have the right to get the dividend information from brokers, and indeed may get sent a big file containing the information.

I would imagine they have similar powers over the registrars of certified holdings.

In the absence of a reference common to both tax return data and interest certificates, I could imagine the cross referencing of the data could be hit or miss. Recent decisions to reduce the tax free thresholds will make that even more so with more marginal cases dragged into the net.

I don't know where you stand legally if all the data that would enable HMRC to assess dividend tax had been made available, that they failed to link it to a taxpayer and said taxpayer kept quiet if not requested to complete a tax return.

[yorkshirelad1]

I was told I no longer had to do tax returns as HMRC had all the information about me and when I said they surely didn't get informed of the certificated dividends I received which varied considerably from year to year, they said I could just write to them at the end of each year and tell them and also if I had any losses to claim. I should have thought they might be interested in any gains exceeding the allowance as well as will be the case in the current year. It seems building societies and banks have to notify HMRC of interest paid so I assumed the platform where I still have a few shares in a dealing account would also notify them so I only told them about the certificated dividends. However, they don't seem to have included the dealing account dividends in their tax calculation and say I don't owe them any tax as my divs. were within the allowance which would not be the case if the dealing account divs. were included and I think I owe them a small sum for last year, likely to be rather more in the current year as I still haven't got round to selling or ISA-ing the shares.

HMRC will certainly have the right to get the dividend information from brokers, and indeed may get sent a big file containing the information.

But what they won't be doing is reconciling all of it with all of our tax accounts. This would be a massive data processing job, and doing it with only name/address/date of birth to go on would throw up so many exceptions that it would keep the entire civil service busy for years (since we're not obliged to give our brokers a unique reference like our NI number).

So they have the information to hand if they're motivated to do an investigation on someone, but they won't be doing it as a matter of course.

The same applies to bank interest.

Scott.

I think HMRC have been reconciling bank interest and tax returns for a while. Maybe on a case by case basis, but I guess that some computer somewhere does the comparison in order for it to be flagged up to a human at HMRC to take a closer look. My mother got caught out about 12 years ago (approx 2011), and she got a letter from HMRC, saying that HMRC had noticed that she hadn't reported some bank interest (and they were right). She and I (or more like me, as her attitude, aged 88, was "what are they going to do to me if I don't....") had a load of paperwork to track down all the interest (she had about 17 accounts with small amounts in them becuase she believed it was better to spread her eggs under the FSCS limit: I persuaded her to put a stop to that and we amalgamated quite a few of them). It got sorted in the end, but not without a lot of hair-pulling (and that was in the days of decent bank internet access, so a lot of phone calls and letters....). I think it is right that HMRC should go after recovering unpaid tax, but I have also heard that they only go after cases where the sums involved make it worthwhile for the cost of their time involved. This was about bank interest. I suspect brokers also report to HMRC (but I don't have any evidence to support that statement).

[Bouleversee]

I used to do a return online, which was fairly quick and easy. However for the past 3 years I haven't been able to get past the additional security questions they have started to ask some people which are impossible to answer if you don't have a valid UK passport (mine has expired and I am unlikely to renew it) or a N. Ireland driving licence (because DVLA weren't up to playing their part if one had a UK one), etc. so I was forced to do paper returns but then they said I didn't need to do them etc. I filed a complaint about it all which dragged on for ages and wasted a lot of time until I had the letter previously mentioned and a phone call not long ago. which is why I didn't get my letter written till late in January, addressed to the person handling my complaint, as requested, and received their calculation today, with a letter from the complaints person which didn't answer a question I had asked in mine. They have actually cancelled my online account

I know the platforms do a tax certificate and will have viewed it and recorded the total platform dividends before doing my own calculations re tax but didn't include them in my letter because I thought the brokers sent them to HMRC as do the annuity companies, etc I didn't include interest either because I had been told they receive that from the banks etc. and they did include that. What I asked you, and nobody has answered, is whether the platforms are supposed to send details of the total taxable dividends to HMRC. I'd like to know before I write to HMRC whether the omission is just an error on their part or whether the person handling my complaint didn't know what was what and gave me the wrong instructions. Either way, I did what I was told to do and it was clear that the figure I supplied was for certificated dividends. I also like to sleep at night and if I didn't waste so much time going round in circles I might get to eat and get to bed at civilised hours.

Edit: I see further replies came in while I was typing my post and that the general opinion is that that they do get told of all dividends. I had said in my letter that I thought I did owe some tax but would await their calculation, which I had been told they would do. I get the impression that, as one of you suggested, they don't want to be bothered by people whose main income is static (as is my annuity unfortunately) and tax not deducted earlier via PAYE or by the annuity company via P60 in my case following HMRC's tax code, does not amount to much. However, dividend income can vary enormously from year to year as can tax allowances! Thanks to all for contributions.

[BullDog]

What I asked you, and nobody has answered, is whether the platforms are supposed to send details of the total taxable dividends to HMRC.

Then ask the platforms, it seems only they can answer your question.

[88V8]

... I assumed the platform where I still have a few shares in a dealing account would also notify them ...

They may do but as said unless the sum is worthwhile HMRC will not do anything with it.

V8

[Bouleversee]

What I asked you, and nobody has answered, is whether the platforms are supposed to send details of the total taxable dividends to HMRC.

Then ask the platforms, it seems only they can answer your question.

Ha!, Ha! I tried that with IWeb this afternoon, via their Chat, which was hopeless. I might try phoning tomorrow but I think enough of you who have kindly responded are sure that the platforms do supply the info to HMRC but the latter don't always check it so I'm not sure there is any point. I might as well just write a letter pointing out that they have been omitted and wait for a fresh calculation. Funnily enough, the letter I received today said "your dividends and interest were well within your savings allowance so do not attract any further tax liability" and "you will note there is no further tax to pay" whereas the actual calculation ended with "Total income tax due: £2.60" and that was without the dividends from the dealing account, all of which will be taxable presumably. I have a feeling the HMRC staff would prefer not to hear from me but not something I feel like risking, especially as the sum owing for 22-23 will be quite a bit larger, I fear.

[dingdong]

HMRC has their Connect computer system which is extremely powerful and perfectly able to link up data sources to individual taxpayers, even if a broker doesn't have your NI number.

The list of data sources they use is huge. This includes importing debit and credit card transactions to look for patterns of spending that are out of line with your reported levels of income, airline sales data, ebay/airbnb data etc.

It's safe to say HMRC always know more about you than you think they would, even if they don't surface this information in a way that would help taxpayers.

[Lootman]

It's safe to say HMRC always know more about you than you think they would

I would have thought the exact opposite - that the taxman wants us to believe that it has all this information about us, regardless of whether it actually does or not!

Either way HMRC is not going to going to disclose what it knows and what it doesn't know, for obvious reasons. So it is all speculation on our part really.

[Bouleversee]

HMRC has their Connect computer system which is extremely powerful and perfectly able to link up data sources to individual taxpayers, even if a broker doesn't have your NI number.

The list of data sources they use is huge. This includes importing debit and credit card transactions to look for patterns of spending that are out of line with your reported levels of income, airline sales data, ebay/airbnb data etc.

It's safe to say HMRC always know more about you than you think they would, even if they don't surface this information in a way that would help taxpayers.

It's not much good to them if they don't access and use the info., however. I've always declared ALL types of dividend in the past and I assumed it was only certificated divs. paid directly into my bank that I included this year and made that clear in my letter so why didn't they pick up the IWeb total and include that?

[stevensfo]

I was told I no longer had to do tax returns as HMRC had all the information about me and when I said they surely didn't get informed of the certificated dividends I received which varied considerably from year to year, they said I could just write to them at the end of each year and tell them and also if I had any losses to claim. I should have thought they might be interested in any gains exceeding the allowance as well as will be the case in the current year. It seems building societies and banks have to notify HMRC of interest paid so I assumed the platform where I still have a few shares in a dealing account would also notify them so I only told them about the certificated dividends. However, they don't seem to have included the dealing account dividends in their tax calculation and say I don't owe them any tax as my divs. were within the allowance which would not be the case if the dealing account divs. were included and I think I owe them a small sum for last year, likely to be rather more in the current year as I still haven't got round to selling or ISA-ing the shares.

HMRC will certainly have the right to get the dividend information from brokers, and indeed may get sent a big file containing the information.

But what they won't be doing is reconciling all of it with all of our tax accounts. This would be a massive data processing job, and doing it with only name/address/date of birth to go on would throw up so many exceptions that it would keep the entire civil service busy for years (since we're not obliged to give our brokers a unique reference like our NI number).

So they have the information to hand if they're motivated to do an investigation on someone, but they won't be doing it as a matter of course.

The same applies to bank interest.

Scott.

I know from the answer to a previous question that HMRC receive notifications of ISAs held as well.

But would they even receive details of the dividends paid 'within' those ISAs?

Steve

[scrumpyjack]

HMRC has their Connect computer system which is extremely powerful and perfectly able to link up data sources to individual taxpayers, even if a broker doesn't have your NI number.

The list of data sources they use is huge. This includes importing debit and credit card transactions to look for patterns of spending that are out of line with your reported levels of income, airline sales data, ebay/airbnb data etc.

It's safe to say HMRC always know more about you than you think they would, even if they don't surface this information in a way that would help taxpayers.

It's not much good to them if they don't access and use the info., however. I've always declared ALL types of dividend in the past and I assumed it was only certificated divs. paid directly into my bank that I included this year and made that clear in my letter so why didn't they pick up the IWeb total and include that?

You must declare all dividends. It is impractical for HMRC to rely on dividend info passed on to them by brokers because there are many reasons why the dividends may not be taxable income of the person in whose name the shares are registered. For example my grandchildren have substantial dividends on shares which are in my name as bare trustee for them. As a matter of good practice I put a note on my tax return on any significant gains or income in my name which I have not included in my return because I am not the beneficial owner - hopefully avoids HMRC getting suspicious because my return does not tally with their database.