A dividend is a distribution of profits after tax by a company to its shareholders.

So first there needs to be some profits to distribute. Then you need to know the tax due on those profits because you can’t distribute that part of the profit.

It is also questionable whether a dividend is a dividend without paperwork to back it up, because most company Articles of Assocation require dividends to be voted at a Board Meeting and paperwork to be prepared. This is certainly what HMRC would expect if they look into it. The paperwork they would expect to see is some Board Meeting Minutes and Dividend Vouchers.

The reason they might look at this is that dividend is taxed differently to PAYE and they might well like to argue for example that a payment from a company to its Director / Shareholder is PAYE and attracts Employer’s NI.