Diversified Energy Share Discussion Threads

[aleman] 04/7/2023 13:55

I don't follow your logic. Surely the tax rate is either 15% with a W8-BEN for the UK double taxation treaty or 0% if it's a normal UK dividend with no WHT, in which case iWeb would be wrong on both counts? If the company says its dividend is treated as a US one and indicates on its website that it is subject to a 15% tax with a UK double taxation treaty and its registrar actually subtracts 15% tax on dividends with a W8-BEN submitted to it, I don't see how iWeb can say its 30%. The highest rate possible with a W8-BEN in each of a Sipp, an ISA, or personally held would be 15% since the registrar then pays it at 15% (but with the possibility of Sipp reclaim for that 15% to make 0%). IWeb are effectively saying the company and its registrars are wrong with that statement. Or is that somehow your point?

[scrwal] 04/7/2023 13:31

I think we can agree that it appears to be a minefield but the iweb stance is interesting.
In my past working life I have had professional dealings with the Inland Revenue and remember acting for a client where I did some work which didn't follow the prevailing this is how it goes. The partner I reported to queried what I was doing but let me submit the paper work which was rejected to his glee. I replied to the Revenue asking them to quote the relevant Taxes Acts sections which clearly stated that I couldn't do what was proposed. The response was that it had been accepted practice but grudgingly admitted that no such sections actually existed and that they were agreeing to what I submitted. A year later someone in the firm pointed out they had tried to do the same thing but the legislation had been amended.

Why could this be relevant - well the DEC website states "Pursuant to Section 7874 of The Internal Revenue Code, Diversified is treated as a U.S. corporation for all purposes under the Code. Therefore, dividends from the Company may be subject to US withholding taxes, depending on the country of residence of the shareholder, and whether the country has an income tax treaty with the United States. The statutory rate of withholding under the Code is 30 percent, which may be reduced by an applicable treaty."
So this gives rise to the W-8BEN stuff but this is a US corporate tax matter only and this is where the iweb view is interesting.

That view in isolation is correct in what was stated in post 5094 by spawny100.
The problem is what is defined as a US source and does DEC itself conform as a US source being registered in the UK. The fact that the trade occurs in the US isn't relevant because it is taxed under US legislation but the dividend is paid by a UK registered entity and isn't as such sourced from the US.
This is taking a very fine line but the precedents can be argued to be any multinational registered in the UK that has income generated in the US but pays out a UK dividend as "normal" with no wht.

Yes the practical consensus is that the W-8BEN rationale should apply but what if the iweb interpretation is actually correct and that the accepted practice is wrong.

[mr smc] 04/7/2023 12:40

I have Dec in both my SIPP and ISA at HL15% in the isa O% in the SIPP

[garycook] 04/7/2023 10:25

ISA,s and Fund and Share account( Trading account) with HL are both 15% witholding Tax deducted.

[t 34] 04/7/2023 08:50

How HL paid divi in an investment ( normal, standard) account????

[spawny100] 04/7/2023 07:56

Thanks Gary but that's for a SIPP so it's different isn't it?

[garycook] 04/7/2023 01:34

In Response to your Concerns
Dear Mr Cook

Thank you for your patience whilst your complaint has been thoroughly investigated. I understand you have raised concerns regarding the deduction if withholding tax against overseas dividend payments you received for Diversified Energy Company Plc and believe this has impacted you financially.

May I firstly sympathise with the frustration you have experienced. We take pride in providing a high standard of service, therefore I’m sorry to learn of your dissatisfaction in this instance.

I have reviewed the handling of the dividend payments received into your SIPP account and appreciate there has been 30% withholding tax deducted for dividends you received in December, March and June. I have been in contact with the relevant department who have explained that due to system limitations Hargreaves Lansdown have been unable to apply a 0% withholding tax rate to US dividends which are credited to client's SIPP accounts as expected.

Whilst your W-8BEN form is classed as restricted on the basis you reside in a country without an equivalent Double Tax Agreement as the UK, the same tax benefits cannot be applied. This specific circumstance is not however relevant when discussing your SIPP on the basis it is documented by HL and should therefore ensure dividends are taxed at 0% given HL are UK based. We have resources in place to resolve this issue however I am unable to provide you with a definitive timeframe.

Taking the above into account, I will be happy to apply the deducted tax back into your SIPP account, I have calculated the total tax deducted for the 3 months’ worth of dividends to equate to £342.55. I will also be happy to offer you £100 to apologise for the issues you have faced which I hope you will accept with our apologies.

I will be discussing this issue in further detail with the relevant department to establish what we can do moving forward to mitigate this issue, I will be sure to write out to you with any further update in due course. The offer of £100 will be paid out to your nominated bank account on record.

I hope the above clarifies our position. If you think that I have misunderstood anything, please do not hesitate to contact me. I have attached a copy of our complaints procedures for your reference. This can be accessed via the link below.

Complaints procedure

However, if you are not satisfied with the outcome of your complaint and do not think that contacting me will help, you have the right to refer your complaint to the Financial Ombudsman Service, free of charge – but you must do so within six months of the date of this email. If you do not refer your complaint in time, the Ombudsman will not have our permission to consider your complaint and so will only be able to do so in very limited circumstances. For example, if the Ombudsman believes that the delay was as a result of exceptional circumstances. The following link gives you further information.
hxxp://www.financial-ombudsman.org.uk/publications/consumer-leaflet.htm Full details about the Financial Ombudsman Service are available at www.financial-ombudsman.org.uk.

Yours Sincerely

Oli Nevin
Client Services Manager
Hargreaves Lansdown

[cassini] 04/7/2023 00:45

I'm not sure how Trading 212 can avoid the WHT totally in an ISA, as that would be tax evasion, surely?

It's owed to either the US Internal Revenue service or some US governmental body. Only a SIPP can escape the WHT entirely.

[spawny100] 03/7/2023 22:27

Some like Trading 212 with no wht at all apparently! I'm thinking transferring my ISA to them. Anyone use their ISA platform? Any good? No transaction fees sounds pretty amazing.

[spawny100] 03/7/2023 21:48

I've complained to the FOS. Will let you know the result here.

[t 34] 03/7/2023 19:49

Beggars belief that some platforms process dividend with 30% wht and some with 15%.

[spawny100] 03/7/2023 14:58

Thanks Gary but I web say it's stated clearly in their terms and conditions as in quote marks in my post.

[garycook] 03/7/2023 13:18

spawny, Its 15% for ISA,s. My Sons ISA holding with II to confirm was deducted at 15%. Complain directly with the FOS.

[spawny100] 03/7/2023 12:23

So iweb took 30% off in my ISA even with a w8-ben form. Crooks. They say "For UK listed shares paying US sourced dividends a 30% Withholding Tax rate is applied even if a W-8BEN form is in place."

[fred177] 01/7/2023 22:23

Transfer the shares to IG snd complete a w8ben that’s what I did

[t 34] 01/7/2023 22:15

Can you try to reclaim money after each divi payment or at the end of tax year??

[howardmorton] 01/7/2023 21:59

T34
Barclays SI have sent me some R189 forms?? (merely statements of non-uk dividends and WHT deducted) and told me to reclaim the money "from the Inland Revenue". I guess this must be reclaimed from the US tax authorities as they have withheld the tax? I have no idea what one is supposed to do.

[fred177] 01/7/2023 21:22

Barclays SI are a nightmare, they don't implement W8 BEN, also if you hold REITS they deduct 20% tax in ISA's and you have to chase to get the money back and sometimes you don't get it had 2 years messing around with them, better to be with a bonafide broker such as IG or II than to be with Barclays not so smart investor IMHO

[t 34] 01/7/2023 18:52

In case of Barclays SI after they take 30% it is possible to reclaim 15% by submitting special form ( R??? ).Does someone know something about this process??

[laurence llewelyn binliner] 01/7/2023 11:36

#Howard Moreton, my spreadsheet is already using the 30% WHT baseline, I will be delighted if I need to change the maths, but not expecting to (tbc).. :o)

A 10% tax free ISA yield is still great as part of a portfolio while sticking to the rules, never have too many eggs in 1 basket regardless of how good it looks..

[meanreverter] 01/7/2023 10:47

Drk1 — My DEC dividend, in an ISA with IG, was converted at 0.7883385 £/$. (This compares with the latest £/$ rate of 0.78817472.) The amount paid was 2.93163p; so clearly dividend withholding tax had been deducted at a rate of 15%:

0.85 × 0.7883385 × 4.375 = 2.931633797.

Perhaps you hold your DEC shares in a SIPP, where the dividends would be sheltered from WHT.

[howardmorton] 01/7/2023 10:04

LLB, Barclays SI have always deducted 30% even if a W-8BEN is in place. I will be amazed if that has changed.

[laurence llewelyn binliner] 01/7/2023 09:21

#Howard Morton, nothing received from Barclays SI yet, but I will come back here and we can see if it makes any difference to have a W8 in place for a trading account or an ISA on the WHT..

[1knocker] 30/6/2023 17:55

Big fat divi received. Not quite so big and fat as I hd assumed it would be as I had not done my sums on the exchange rate, but very gratifying none the less.