Dividend Reinvestment Plans DRIPS and Income tax

Please can a HMRC Admin clarify the following on DRIPS: An individual paid into a company share scheme for several years. On maturity of the schemes and on leaving the company the former employee continues to hold the shares. Rather than take cash dividends, the former employee utilises the dividend reinvestment plan available and the amount is reinvested straight back into the company. The former employee receives only a new share certificate that is allocated against a share holder reference number. The former employees accountant has advised that the payment be subject to income tax on the self assessment as it is a dividend. Information on this forum suggests that as the dividend has been reinvested back into the company via a DRIP and not taken as a cash dividend, the dividend does not be declared on the self assessment but will be liable to CGT on the gain from any future sales of the shares. Correct? Thanks in advance.

Hi,
If a company pays out cash dividends to shareholders and they use that cash to buy additional shares (in other words, they reinvest the dividends themselves – the company does not automatically reinvest the dividends on their behalf), that shareholder will owe income tax on the dividend payments made in the year they are received – just as if they were taken as cash and never reinvested. 
If, however, the company reinvests the dividends by using them to purchase additional shares on a shareholders’ behalf through a dividend reinvestment plan (DRIP) (the company reinvests the shares automatically, without the shareholder having to do a thing or ever receiving the dividends physically themselves), that shareholder does not pay income tax on the reinvested dividends until they eventually sell the shares. At the point of selling the shares, capital gains tax would apply on any increase in share value since the reinvestment occurred.  
Thank you.