Advice for returning to contracting

[northernladuk]

I would only do it the once though, when she gets a job.

Twice. You allocate her the shares and then remove them. They link her name between change in shareholding and one year of dividend income on Self assessment and boom...

Everyone wanting to aggressively syphon money out of your limited would only need 2 changes as well...

[too_many_details]

Twice. You allocate her the shares and then remove them. They link her name between change in shareholding and one year of dividend income on Self assessment and boom...

Everyone wanting to aggressively syphon money out of your limited would only need 2 changes as well...

So what legitimate reasons would there be to add and remove a shareholder? I've looked at the government sites and they show how to do it.

[GhostofTarbera]

Remember to factor in upcoming IR35 rules


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[too_many_details]

Twice. You allocate her the shares and then remove them. They link her name between change in shareholding and one year of dividend income on Self assessment and boom...

Everyone wanting to aggressively syphon money out of your limited would only need 2 changes as well...

According to what I have read, I can add my wife as a shareholder with no issue. What am I missing here that makes you think HMRC will look on this unfavourably?

[too_many_details]

Remember to factor in upcoming IR35 rules


Sent from my iPhone using Contractor UK Forum

Good point, and thats why I'm thinking of only contracting until April 2021 and then go back to perm.

[northernladuk]

I can add my wife as a shareholder with no issue. What am I missing here that makes you think HMRC will look on this unfavourably?

Because you are going to add her purely to offload of dividends and take her off soon after. You are doing HMRC out of tax money with a pretty aggressive tactic.

[Lance]

Because you are going to add her purely to offload of dividends and take her off soon after. You are doing HMRC out of tax money with a pretty aggressive tactic.

To be fair that’s why Arctic systems split the shares....

Your point, I think, is that changing share split, is not protected by the Arctic systems test case.
However I don’t believe as a one off it would be a problem.

changing twice a year might attract more attention but whether that would fail a test, or if HMRC would even pursue it is speculation.

[northernladuk]

To be fair that’s why Arctic systems split the shares....

Your point, I think, is that changing share split, is not protected by the Arctic systems test case.
However I don’t believe as a one off it would be a problem.

changing twice a year might attract more attention but whether that would fail a test, or if HMRC would even pursue it is speculation.

Wasn't she already director in the Arctic systems and the argument it was fair for her supporting hubby as he ran the business and her directors responsibility. In this case she's nothing more than a one off tax mule.

It's aggressive avoidance, pure and simple, so whatever test the want to apply, it will fail.

[NotAllThere]

I would only do it the once though, when she gets a job.

And then she gets made redundant and you do it again... The main point of taking dividends (at least when I did it) is to avoid paying both ERNIC and EENIC - making you worse off than an employee. Income levelling is a good reason to take dividends as well.

But adjusting shareholdings regularly to minimise tax... nah. But it's your backside that HMRC will ream, so who cares what a bunch of moralisers think, right?

[Lance]

Wasn't she already director in the Arctic systems and the argument it was fair for her supporting hubby as he ran the business and her directors responsibility. In this case she's nothing more than a one off tax mule.

It's aggressive avoidance, pure and simple, so whatever test the want to apply, it will fail.

Or..... she takes the shares, doesn’t get a job and they carry like that for good... pure and simple income shifting as per Arctic systems.

I think the point is, fine to give her shares, but don’t duck around with them.