Wife as a director of the company?

[Geekman]

Dear all,

I appreciate there have been several threads available with similar subjects. However there mainly seem to be around splitting dividends and control of the company. My question is purely from IR35 perspective.

Somewhere in the middle of the below page it says:
What triggers an IR35 investigation? :: Contractor UK

"Someone operating through a limited company who has relatively low turnover; is the sole director; has minimal expenses; pays [themselves] the minimum wage but has large dividends."


Curerntly I am the sole director of my company. My wife is a shareholder(50%) and an employee but not a director yet (She does not have any other source of income). Looking at the above page, should I make her director as well? I am fine with her having more control/say in the company etc after she becomes a director. But purely from IR35 perspective would it be a wise decision? What are pros and cons?

Many thanks in advance!

[Craig at Nixon Williams]

IR35 is to do with your contract and working practices, not who is a director in the company. Therefore making her a director would have no influence at all on your IR35 status.

[TheCyclingProgrammer]

Presumably her role in the company is purely administrative and she isn't actually a fee earner.

As Craig says, an IR35 investigation would focus on the specific contract and working practices and relates to a single individual so having other employees, fee-earning or otherwise would be unlikely to make any difference to your case.

That said, having more than one fee-earning employee/director would possibly make you less of a target as far as HMRC's business entity tests are concerned (depending on how much stock you want to put in them), but its still no guarantee. You could still be operating a limited company as a front for multiple disguised employees, after all.

Unless you have a good reason to make her director, I wouldn't bother (and if she's been employed long enough she should qualify for ER on any future capital distribution anyway).

[northernladuk]

Why do people mess with stuff when they have so little understanding or the willingness to understand it?

I would imagine the OP should be more worried about HMRC querying how much he is paying the wife for the work she is supposedly doing.

[Geekman]

Craig, yes correct. Wife as a director doesn't change my IR35 status however what I am looking for here is a way to minimise getting shortlisted for HMRC's IR35 investigations as they probably look at symptoms like mentioned in the above page. So if making my wife as a directory decreases (even by a tiny amount) my chances of getting shortlisted, I would make her a director.

Sounds sensible?

[northernladuk]

Craig, yes correct. Wife as a director doesn't change my IR35 status however what I am looking for here is a way to minimise getting shortlisted for HMRC's IR35 investigations as they probably look at symptoms like mentioned in the above page. So if making my wife as a directory decreases (even by a tiny amount) my chances of getting shortlisted, I would make her a director.

Sounds sensible?

I would think that risk would be offset by the potential exposure you cause changing your company set up. It's not worth doing from an IR35 perspective. Concentrate on gathering evidence at your clients and making sure your working conditions are correct.

[Craig at Nixon Williams]

Craig, yes correct. Wife as a director doesn't change my IR35 status however what I am looking for here is a way to minimise getting shortlisted for HMRC's IR35 investigations as they probably look at symptoms like mentioned in the above page. So if making my wife as a directory decreases (even by a tiny amount) my chances of getting shortlisted, I would make her a director.

Sounds sensible?

Simply naming her as a director will not make a difference.

As other have suggested, if you are paying her a salary and she isn't actually generating any fees for the company then you might want to review this situation.