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Consolidated Tax Certificate

Practical Issues
gt94sss2
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Consolidated Tax Certificate

#447846

Postby gt94sss2 » October 4th, 2021, 7:07 pm

Can anyone tell me if it's a legal/HMRC requirement for a nominee broker to issue a Consolidated Tax Voucher of some sort if customers hold shares with them and receive dividends (not in a tax free account)?

Lootman
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Re: Consolidated Tax Certificate

#447848

Postby Lootman » October 4th, 2021, 7:12 pm

Do you mean consolidated tax certificate or a tax voucher? They are two different things.

The certificate is issued annually by a nominee broker and covers everything you hold with and through them for that tax year.

The voucher applies to an individual dividend payment. If paid by cheque the voucher is typically physically attached to the cheque. If not it is available electronically.

At least with banks a certificate does not have to be issued for trivial amounts. Not sure of the threshold, nor whether the same applies to brokers.

Gengulphus
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Re: Consolidated Tax Certificate

#447876

Postby Gengulphus » October 4th, 2021, 8:59 pm

I suspect that gt94sss2 is using the phrase "Consolidated Tax Voucher of some sort" to mean a document detailing all the dividends received in the account during a tax year, whatever it's called - and I doubt it matters all that much exactly what such documents are called. That's because one of my two nominee brokers calls their documents "consolidated tax certificate"s, the other calls them just "tax certificate"s, while the companies that use ComputerShare as their registrar call theirs "dividend confirmation"s and those that use Equiniti call theirs "tax voucher / dividend confirmation"s (I haven't checked the less frequently used registrars). If you go back to the 2015/2016 tax year or earlier, "tax voucher" is more universally used by companies - and there are also the companies that only issue one of them per tax year, typically covering two or four dividend payments, calling the document things such as an "annual dividend confirmation" or a "consolidated tax voucher".

But as regards the actual question being asked, I suspect the answer is that there is a legal/HMRC requirement for a nominee broker to ensure that their customers get detailed information about their dividend payments. That information would include which companies paid them, what the qualifying dates were to be paid them, what dates they were officially paid on, how much the payments were and details of any tax deducted or attached tax credits, including details about any tax deducted. But I also suspect that how the nominee broker ensures that is up to the broker... The reason I suspect those things is that I was once a customer of a nominee broker who didn't actually produce any such documents themselves - instead, they ran their nominee accounts on an 'individually designated' basis rather than the usual 'pooled' basis, i.e. with them holding one registered shareholding in a company per customer holding that company's shares, registered as being owned by names like "ABCDE Nominees a/c 12345" at the broker's address, and also presumably holding a similar named bank account per customer. So when a company paid a dividend, it made separate payments to each of the broker's customers (which were presumably each mandated to the appropriate account) and sent a separate tax voucher for each customer to the broker - which the broker then just posted on to the appropriate customers. A very efficient system in some ways, offloading work such as splitting dividend payments up and producing per-customer documentation to the registrars - but the broker must have spent a fortune on postage! Even allowing for cheap bulk mailing costs, I think they must have spent more on posting tax vouchers to me than they ever got from charging commission on my trades... And so I wasn't really surprised when they decided to exit the cheap online broker business in 2009!

As is hopefully clear from my use of the word "suspect", however, none of that is a definitive answer. I'd be very surprised if there were no obligation on nominee brokers to ensure that their customers get the information they need about dividends they've received for their tax records - but I'm afraid I cannot point to specific laws or regulations that say the broker must supply it.

Gengulphus


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