Client gifting shares - tax and IR35 situation?

[northernladuk]

When you decide you know all you need to know, you can make a fool of yourself by missing something pretty important like:

Yup but why would a start up give a 40k incentive?. That is also the clients valuation which is, looking at the percentages of start up success, going to really be zero.

So much wrong and unknown in this thread it's impossible to say either way.

[Lance]

Yup but why would a start up give a 40k incentive?. That is also the clients valuation which is, looking at the percentages of start up success, going to really be zero.

So much wrong and unknown in this thread it's impossible to say either way.

Jam tomorrow.

[WordIsBond]

Yup but why would a start up give a 40k incentive?. That is also the clients valuation which is, looking at the percentages of start up success, going to really be zero.

So much wrong and unknown in this thread it's impossible to say either way.

I don't think it's impossible to say some things. If they want to give him shares, whether it is worth £40K or £4K or £400, you don't tell them to FRO, you tell them thank you, let's figure out the most efficient way to do this for tax.

The person to whom I was responding said 'get paid in cash for the services you supply.' OP already did, this is a gift, and not in lieu of cash payment. So his comment was right up near the top of the stupid scale.

Why would they do it? Maybe he's contracted for them for four years and they want to give him an incentive to stay involved because they like his work. Maybe he's been sleeping with the boss's wife, or maybe the boss has been sleeping with his, or maybe he himself has been sleeping with the boss, or maybe all three. Maybe they are finally taking their product to market and think it's going to be worth £40 million and they feel guilty him not getting a cut of the action. Maybe the boss was too drunk at the Christmas party to be able to pay the tab, and he covered it until the boss sobered up, and the boss has always felt indebted to him. Maybe they're afraid of Komrade Korbyn winning an election and want to be able to say, 'See, we gave EVERYBODY shares, even the contractor, go pick on someone else!' Maybe he just tells good jokes.

I'm not sure there's a thing 'wrong' in this thread. There's a lot unknown but actually the reason 'why' might not be all that relevant to the question he's asking. It might have a lot to do with IR35, but he's somewhat alert to that. What he wants to know is tax treatment. The reason why may or may not be relevant to that.

Chances are good there are things he doesn't want to say on an open forum, which is why he probably just needs to pay for advice, unless he thinks it really is only worth about £4K, rather than £40K. In that case, it may not be worth paying for advice, if you can defend the lower valuation.

[northernladuk]

I don't think it's impossible to say some things. If they want to give him shares, whether it is worth £40K or £4K or £400, you don't tell them to FRO, you tell them thank you, let's figure out the most efficient way to do this for tax.

The person to whom I was responding said 'get paid in cash for the services you supply.' OP already did, this is a gift, and not in lieu of cash payment. So his comment was right up near the top of the stupid scale.

Must admit I don't totally agree but it certainly wasn't the best statement. The fact the OP thinks they are worth 40k yet the start up hasn't even launched so there is a 90% chance they won't be worth the paper they are written on shows a possible level of nativity on the OP's part so nothing really goes well from there. So yes, FRO isn't the best but something looks extremely fishy and you can't blame someone for reading between the lines here. I'm struggling to believe the OP is being paid a decent rate with normal terms as you would with a normal gig and the shares, maybe not they are instead of payment, but must be there to make something up. The only times we've ever had posts on here about shares they weren't totally in lieu of payment either but came to naught leaving the contractor high and dry so might be one for most people to pass (but not maybe tell them to FRO)

Why would they do it? Maybe he's contracted for them for four years and they want to give him an incentive to stay involved because they like his work. Maybe he's been sleeping with the boss's wife, or maybe the boss has been sleeping with his, or maybe he himself has been sleeping with the boss, or maybe all three. Maybe they are finally taking their product to market and think it's going to be worth £40 million and they feel guilty him not getting a cut of the action. Maybe the boss was too drunk at the Christmas party to be able to pay the tab, and he covered it until the boss sobered up, and the boss has always felt indebted to him. Maybe they're afraid of Komrade Korbyn winning an election and want to be able to say, 'See, we gave EVERYBODY shares, even the contractor, go pick on someone else!' Maybe he just tells good jokes.

All fair reasons but it's likely he'll get squat for them so if they are part of the overall package to stay he needs to be very aware of the most likely outcome and as you also say later, may have a strong bearing on the answer. His accountant is likely to give him the tax answer but not the real answer to the whole situation which I think would be a big mistake on the part of the OP.

I'm not sure there's a thing 'wrong' in this thread. There's a lot unknown but actually the reason 'why' might not be all that relevant to the question he's asking. It might have a lot to do with IR35, but he's somewhat alert to that. What he wants to know is tax treatment. The reason why may or may not be relevant to that.

Chances are good there are things he doesn't want to say on an open forum, which is why he probably just needs to pay for advice, unless he thinks it really is only worth about £4K, rather than £40K. In that case, it may not be worth paying for advice, if you can defend the lower valuation.

IMO the fact he's asking a question that's based very heavily on the details yet not giving any detail is what's wrong. Being pedantic, is wrong the incorrect word to use? OK, I'll go with that but something certainly isn't right here. You say yourself the reason may or may not influence the decision but as the thread stands that detail is missing so it's a pretty poorly laid out question at the very least. I'm probably biased though as I can't stand these questions where someone asks a question of a small part of a situation that's attractive to them and conveniently forgets everything else that would cause the answer to be something they don't want to hear.

[northernladuk]

I'd be very interested to get in to the detail of his IR35 status when working for a startup as well. The poster says..

I maintain a strict boundary on these things to ensure I remain outside of IR35.

Going to be very difficult indeed to do that at a fast moving startup, particularly when the client has given you what he may consider a reasonable chunk of his business to do what you need to get it going.

I appreciate it does depend on the exact details of the gig but would be interesting to know. I can't see a defined piece of work happening so D&C is going to be a nightmare. I can't imagine they'd be happy with RoS either and I wouldn't think they give a monkeys about the treating contractors any different to perms in the quest to deliver. Now we've been discussing it this payment of shares can't help either. QDOS specifically say bonus's have been picked up by HMRC so can't see gifting of shares would be any better.

https://www.contractoruk.com/forums/...ml#post1623836

So I think the OP is going to struggle with his defined boundaries.

But anyway... I'll shut up.