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pscont
22nd November 2018, 16:14
Does anyone use alphabet shares gifted (or better sold at market value) to unconnected persons (e.g. mother/father or friend).

Restructure plan is:

director: 53 ordinary shares
spouse: 47 ordinary shares
new alphabet shares: 2 with full voting rights.

Total 102 shares. director has >51% of Ltd.

Anyone does it?

northernladuk
22nd November 2018, 16:15
Only people that have a clue and even then they'd be pretty daft to. They probably asked their accountants first as well.

Another tax dodging failed idea it seems.

WordIsBond
22nd November 2018, 21:52
Does anyone use alphabet shares gifted (or better sold at market value) to unconnected persons (e.g. mother/father or friend).

Restructure plan is:

director: 53 ordinary shares
spouse: 47 ordinary shares
new alphabet shares: 2 with full voting rights.

Total 102 shares. director has >51% of Ltd.

Anyone does it?
MyCo has three classes of shares. All shares have equal rights. There is sound business reason for doing so.

If you tell us the business reason for the classes of shares you propose we might be able to comment on it. Since HMRC can easily see your share structure by checking Companies House it would probably be a good idea to have a real business reason for using alphabet shares. Otherwise, you might end up in an uncomfortable investigation as to whether you are using them as income settlement or something else inappropriate.

In short, it is possible, and might make sense in some cases, but it might be a really bad idea, and many people who get brilliant and exciting ideas about using alphabet shares are probably setting themselves up for trouble.

northernladuk
22nd November 2018, 22:30
MyCo has three classes of shares. All shares have equal rights. There is sound business reason for doing so.

If you tell us the business reason for the classes of shares you propose we might be able to comment on it. Since HMRC can easily see your share structure by checking Companies House it would probably be a good idea to have a real business reason for using alphabet shares. Otherwise, you might end up in an uncomfortable investigation as to whether you are using them as income settlement or something else inappropriate.

In short, it is possible, and might make sense in some cases, but it might be a really bad idea, and many people who get brilliant and exciting ideas about using alphabet shares are probably setting themselves up for trouble.

Have a look at the OP started threads history. There is absolutely no business reason for doing any of the evasion techniques he's asking about. Just looking for a way to screw his company for more than he is due.

Old Greg
22nd November 2018, 22:39
Have a look at the OP started threads history. There is absolutely no business reason for doing any of the evasion techniques he's asking about. Just looking for a way to screw his company for more than he is due.

Evasion is an ugly word for an honest entrepreneur with a keen eye for personal growth.

northernladuk
22nd November 2018, 22:42
Evasion is an ugly word for an honest entrepreneur with a keen eye for personal growth.Ah. Yes you are quite correct. If only there was one around I might have the chance to apologise and correct my poor phrasing.

ContrataxLtd
23rd November 2018, 11:01
Might be worth noting that there is a chance that alphabet shareholdings won't qualify for entrepreneurs relief if/when the time comes to close/sell based on the new changes from the budget. Although the revenue have said this is an unintended consequence that means nothing if they want to really get you and deny relief.

Martin
Contratax Ltd

DaveB
23rd November 2018, 11:17
Does anyone use alphabet shares gifted (or better sold at market value) to unconnected persons (e.g. mother/father or friend).

Restructure plan is:

director: 53 ordinary shares
spouse: 47 ordinary shares
new alphabet shares: 2 with full voting rights.

Total 102 shares. director has >51% of Ltd.

Anyone does it?

If the only reason to do it is to take advantage of other individuals tax allowances in order to extract more cash from the company then it is a very bad idea. Given your previous posts I think it's safe to assume this is your intention.

If any of the cash from the new shares makes its way back to other shareholders then HMRC will regard that as evaision and tax you appropriately along with penaties and interest regardless of how much they may or may not have paid for them.

In case of an investigation they will look at gifts or other transfers received from those individuals and match them to dividend payements they received and assume you are on the fiddle. They will also investigate the people involved and possibly charge them with conspiracy.

Stop trying to come up with ways to play the system, none of them work and have all been thought of by others long ago. Even the ones that appeared to work at the time can come back and bite you later cf. the Loan Charge.

WordIsBond
23rd November 2018, 13:23
Have a look at the OP started threads history.
LOL. Not being an expert in everything that everyone here has posted, and not wanting to become such, I think I'll pass. My comment is legit whether he's a chancer or not. There's sufficient usefulness to anyone reading the question who isn't a chancer, and sufficient warning to anyone who is.

GreenMirror
23rd November 2018, 13:28
Read the scheme enquiries thread. Then decide if its a good idea or not.....

northernladuk
23rd November 2018, 13:58
LOL. Not being an expert in everything that everyone here has posted, and not wanting to become such, I think I'll pass. My comment is legit whether he's a chancer or not. There's sufficient usefulness to anyone reading the question who isn't a chancer, and sufficient warning to anyone who is.

I get what you are saying but I don't need to be an expert in everything people have posted. I'll often just take 3 or 4 clicks to check the started threads. They often give a very real view on what the poster knows or is trying to achieve and then feedback can be altered to suit. It can mean the difference between an interesting and detail thread and one where someone is just blindly trying to rip the system off so pointless carrying on.

pscont has a very long history or ridiculous questions and many of us don't even need to click his history to know this. His paying relatives question and buggering about with the company loan are pretty well known.

But fair comment.

WordIsBond
24th November 2018, 13:35
pscont has a very long history or ridiculous questions and many of us don't even need to click his history to know this. His paying relatives question and buggering about with the company loan are pretty well known.

Sometime in 2019 someone will come to CUK looking for answers about alphabet shares. If they are smart they will search the forum and find this thread. If they aren't, they will post a new thread asking about alphabet shares, and someone, probably you :wink, will tell them to search the forum. Either way they'll end up finding this thread.

If they see your first comment, and if they see mine, which do you think will be more useful for them? It's an open forum. I like to try to give answers that may be useful to other people who will read it later, as well as to OP. I don't mind OP being informed of the error of his ways, I took a mild shot at him in another thread a week or two ago. But you'd already done that, and I was looking past him to other readers now and in future. It's not a private conversation with OP that we're having here.

northernladuk
24th November 2018, 14:42
Sometime in 2019 someone will come to CUK looking for answers about alphabet shares. If they are smart they will search the forum and find this thread. If they aren't, they will post a new thread asking about alphabet shares, and someone, probably you :wink, will tell them to search the forum. Either way they'll end up finding this thread.

If they see your first comment, and if they see mine, which do you think will be more useful for them? It's an open forum. I like to try to give answers that may be useful to other people who will read it later, as well as to OP. I don't mind OP being informed of the error of his ways, I took a mild shot at him in another thread a week or two ago. But you'd already done that, and I was looking past him to other readers now and in future. It's not a private conversation with OP that we're having here.

Well that's me told :igmc:

WordIsBond
26th November 2018, 13:39
Well that's me told :igmc:
?? I wasn't trying to 'tell' you, just explaining why I answered the way I did after you'd already responded to him.

The only person who really needed 'told' in this thread was probably OP. He seems to need 'told' a lot....

I hope you don't think I was taking a shot at you, I never intended to. Well, this time. :)

cojak
26th November 2018, 17:14
?? I wasn't trying to 'tell' you, just explaining why I answered the way I did after you'd already responded to him.

The only person who really needed 'told' in this thread was probably OP. He seems to need 'told' a lot....

I hope you don't think I was taking a shot at you, I never intended to. Well, this time. :)

Oh, I wouldn’t worry about NLUK, potshots only manage to wing him...

northernladuk
26th November 2018, 17:33
Oh, I wouldn’t worry about NLUK, potshots only manage to wing him...:banana:

Who loves ya baby!

WTFH
26th November 2018, 20:20
I wouldn’t worry about NLUK, potshots only manage to wing him...*



*Note: this is all my own original post, not copied from anyone else. ;)

cojak
26th November 2018, 21:45
I wouldn’t worry about NLUK, potshots only manage to wing him...*



*Note: this is all my own original post, not copied from anyone else. ;)

It must have been subconscious then because I wrestled with adding ‘most’ to the potshots bit...

northernladuk
26th November 2018, 22:03
Blimey. You report a post and there isn't a mod in sight. Open season potshots on me and you're knee deep in the buggers.

WTFH
26th November 2018, 23:35
Blimey. You report a post and there isn't a mod in sight. Open season potshots on me and you're knee deep the buggers.

It’s cause we NAT loves you.

As for there not being a mod in sight? Stop picking your nose, and you should have washed your hand earlier, that’s disgusting.

northernladuk
26th November 2018, 23:57
It’s cause we NAT loves you.

As for there not being a mod in sight? Stop picking your nose, and you should have washed your hand earlier, that’s disgusting.

I pulled out this massive booger and imagine my surprise when I noticed it looked just like you!

The really weird thing about it all is I don't know what you look like.. but I am sure my booger looks like you.

WordIsBond
27th November 2018, 09:22
It's cool how the mods here really set the tone for decorum in the professional forums.

If you're knee deep in the boogers, you really need to see a doctor.

pscont
27th November 2018, 12:49
Could mods clean the off topic in here?
Just asking like....

By the way, thanks for the one or two sensible inputs. And yes, I have a 100% valid business reason to issue A/B shares, as valid as everyone else's.

pscont
27th November 2018, 12:53
MyCo has three classes of shares. All shares have equal rights. whether you are using them as income settlement or something else inappropriate.

In short, it is possible, and might make sense in some cases, but it might be a really bad idea, and many people who get brilliant and exciting ideas about using alphabet shares are probably setting themselves up for trouble.

I thought if the shares are with equal rights and are sold to a buyer at real value i.e. 1/103rd of the profit of the LTD at this moment (which is a price too high considering a contract will end soon) then settlement rules are not broken.
At least this is the guidance in the HMRC's documents.

WordIsBond
27th November 2018, 15:53
LOL, we got moved to General. That's probably my fault for taking shots at the mods. Rather than clean up their horrible behaviour(!!!!) they moved it to General! Shocking, that!

Ok, one more serious comment here:

I thought if the shares are with equal rights and are sold to a buyer at real value i.e. 1/103rd of the profit of the LTD at this moment (which is a price too high considering a contract will end soon) then settlement rules are not broken.
At least this is the guidance in the HMRC's documents.
You could certainly sell shares with equal rights for an equal share of the company's value. And if you used the same class of shares then as long as you don't have a wildly inappropriate valuation, you should be fine.

But if you have alphabet shares, then presumably the purpose is to pay different dividends to the different classes. If dividends are disparate then that should have been reflected in the sale price. If you sold the shares at 1/103 of the value of the company but pay dividends of, say 1/3 of the disbursed dividends to these shareholders, HMRC is likely to look askance at that and say this is a settlement.

I'll give you an example of a business reason. I have an employee who is working on a long-term R&D project. He's no longer contributing to the general revenue of the company. So we converted his shares to another class of shares. If this project pays off like we think it will, he's going to make a killing on it, because his shares are going to get a really nice dividend that nobody else gets. But his shares aren't getting any dividends now, because we don't know if this is going to be a profitable project or not, and because he's not contributing to the profit of the company right now.

The project might fail. It might not sell. There's risk but also a huge upside for him and a big part of that will be dividends. That's why we changed his class of shares.

That's a business reason. We use employee ownership as a means of profit-sharing and we have two distinct revenue streams, one actual and the other potential. This divide is reflected in the class of shares owned by the employees who produce the different streams.

What is your business reason for selling alphabet shares (instead of just more shares of the same class as yours)? What in your business justifies that?

northernladuk
27th November 2018, 16:27
We've got a sensible answer.. Can we move back to Prof forums please.

northernladuk
27th November 2018, 16:29
What in your business justifies that?

Non of his other scams would work.

AtW
27th November 2018, 16:34
Could mods clean the off topic in here?
Just asking like....

By the way, thanks for the one or two sensible inputs. And yes, I have a 100% valid business reason to issue A/B shares, as valid as everyone else's.

You need proper tax advisor’s advice (and probably legal too)

Paddy
27th November 2018, 16:43
Does anyone use alphabet shares gifted (or better sold at market value) to unconnected persons (e.g. mother/father or friend).

Restructure plan is:

director: 53 ordinary shares
spouse: 47 ordinary shares
new alphabet shares: 2 with full voting rights.

Total 102 shares. director has >51% of Ltd.

Anyone does it?


The cat has 51% of the shares and he insists spending company money on tuna.

WTFH
27th November 2018, 16:57
LOL, we got moved to General. That's probably my fault for taking shots at the mods. Rather than clean up their horrible behaviour(!!!!) they moved it to General! Shocking, that!


Kinda. ;)

Also, this guy is regularly trolling the forum with ideas for ways to commit tax fraud lend money from his company, trade shares in his company, etc. If this stayed in Accounting, a newbie might not realise that the ideas were not quite what they seemed, and may use the OPs posts as justification for doing similar.

While the OP may want to be genuine in asking questions, as long as he evades/avoids giving meaningful information and answering direct questions with direct answers, while trying to bypass the swear filter, he may well find all his latest scams get moved to general.

Many moons ago on another forum we had a section for Bad Advice/Bad Ideas. It wasn't quite "General" but it meant that if someone thought "I wonder could I get my sister's dog to marry my dog and then pay reduced tax on the dividends due to the married allowance"? They'd probably find Garnet/Kolata/etc had come up with the idea already and had been shot down already.
It could also be quite humorous as there were times that regulars would ask a question and the prize would be given to the worst advice given.

m0n1k3r
28th November 2018, 10:20
MyCo has three classes of shares. All shares have equal rights. There is sound business reason for doing so.

There is usually little reason for having different classes of shares if they all have the same rights, unless you want to make the classes separately redeemable or such.

pscont
28th November 2018, 12:34
LOL, we got moved to General. That's probably my fault for taking shots at the mods. Rather than clean up their horrible behaviour(!!!!) they moved it to General! Shocking, that!

Ok, one more serious comment here:

You could certainly sell shares with equal rights for an equal share of the company's value. And if you used the same class of shares then as long as you don't have a wildly inappropriate valuation, you should be fine.

But if you have alphabet shares, then presumably the purpose is to pay different dividends to the different classes. If dividends are disparate then that should have been reflected in the sale price. If you sold the shares at 1/103 of the value of the company but pay dividends of, say 1/3 of the disbursed dividends to these shareholders, HMRC is likely to look askance at that and say this is a settlement.

I'll give you an example of a business reason. I have an employee who is working on a long-term R&D project. He's no longer contributing to the general revenue of the company. So we converted his shares to another class of shares. If this project pays off like we think it will, he's going to make a killing on it, because his shares are going to get a really nice dividend that nobody else gets. But his shares aren't getting any dividends now, because we don't know if this is going to be a profitable project or not, and because he's not contributing to the profit of the company right now.

The project might fail. It might not sell. There's risk but also a huge upside for him and a big part of that will be dividends. That's why we changed his class of shares.

That's a business reason. We use employee ownership as a means of profit-sharing and we have two distinct revenue streams, one actual and the other potential. This divide is reflected in the class of shares owned by the employees who produce the different streams.

What is your business reason for selling alphabet shares (instead of just more shares of the same class as yours)? What in your business justifies that?

What you say makes sense, but this setup doesn't stop HMRC questioning why at some point someone owning AB shares got a huge dividend, compared to the other shareholders.
I dont think the "potentiality" of revenue will fly with HMRC because it is artificial and really hard to prove/disprove.
At the end of the day AB shares will almost certainly bring different dividend distribution which, is the point really.
Question is what factors will make it bulletproof to the settlement regulation and we are not talking about spouse here, but any shareholder.

pscont
28th November 2018, 12:47
To extend the topic a little.
Has any of you gifted (or sold) shares to your mother/father/grandad(mom)? Regular shares. And what happens when you pay divi on those?
Say you are poor spouse-less sod (not hard to imagine on this forum) and you want your old guys to have some extra money to their pension.

northernladuk
28th November 2018, 13:26
But that is exactly what the legislation is there to stop so surely its a complete no no for exactly the reason you want to do it. That would be the perfect scenario of non business related aggressive avoidance.

It also sums up your whole poor approach to trying to push the boundaries too far with your daft ideas.

WTFH
28th November 2018, 13:29
To extend the topic a little.
Has any of you gifted (or sold) shares to your mother/father/grandad(mom)? Regular shares. And what happens when you pay divi on those?
Say you are poor spouse-less sod (not hard to imagine on this forum) and you want your old guys to have some extra money to their pension.

Do these relatives live with you (or you with them)?
Would this money be coming back to you directly or indirectly?
Would this money be used to offset any payments that you would be making to them or on their behalf?

pscont
28th November 2018, 14:14
Do these relatives live with you (or you with them)?
Would this money be coming back to you directly or indirectly?
Would this money be used to offset any payments that you would be making to them or on their behalf?

1. No.
2. Depends.
3. No.

pscont
28th November 2018, 14:17
But that is exactly what the legislation is there to stop so surely its a complete no no for exactly the reason you want to do it. That would be the perfect scenario of non business related aggressive avoidance.

It also sums up your whole poor approach to trying to push the boundaries too far with your daft ideas.

On what basis? Because they are your relatives?
What if it was someone else who is a shareholder - friend of some sort. There must be a clear cut where this is not a problem.
Or it only works for unrelated persons - think of shareholders of amazon (if/when they pay dividend).

northernladuk
28th November 2018, 14:18
On what basis? Because they are your relatives?
What if it was someone else who is a shareholder - friend of some sort. There must be a clear cut where this is not a problem.
Or it only works for unrelated persons - think of shareholders of amazon (if/when they pay dividend).

Why the **** would you give a portion of your hard earned profit to a friend for nothing?

pscont
28th November 2018, 14:21
Why the **** would you give a portion of your hard earned profit to a friend for nothing?

I never said it is for nothing, if you could be arsed to read the topic.
Also, I wont, and this is more of an example situation.

Zigenare
28th November 2018, 14:22
Why the **** would you give a portion of your hard earned profit to a friend for nothing?

Why the **** would you bother responding to such a wind up merchant?

Zig - In "don't answer that" mode!

WTFH
28th November 2018, 14:27
Would this money be coming back to you directly or indirectly?




Depends.



Elaborate please.

pscont
28th November 2018, 14:40
Elaborate please.

Nothing to elaborate if you pay divi to your dad.
The money will never come back to you, but he might buy a chocolate for the kid when he visits.
So it depends.

AtW
28th November 2018, 14:49
Gifting shares will trigger CGT

northernladuk
28th November 2018, 14:54
I never said it is for nothing, if you could be arsed to read the topic.
Also, I wont, and this is more of an example situation.

Well it's stupid example situation. Instead of plucking dumb, baseless and half thought out examples out of thin air why not try understand the whole legislation in detail and THEN try and analyse your options.

If you are getting anything back in return that isn't around the payment for the shares then you've got a problem and it looks like you are evading tax. If you take payment for the shares which is tiny compared to the dividends given then it's again, not business related and just looks like another evasion tactic.

Stop with the stupid ideas, go do some of your homework to try and understand the actual basics and the apply some logic, not guesswork.

pscont
28th November 2018, 14:59
If you take payment for the shares which is tiny compared to the dividends given then it's again, not business related and just looks like another evasion tactic.


How so?
Why dont you (or cant you) read the legislation and provide firm terms, not 'looks like' hypotheses.

AtW
28th November 2018, 15:10
How so?
Why dont you (or cant you) read the legislation and provide firm terms, not 'looks like' hypotheses.

To be sure you will need to get valuation approval from HMRC - if you sell below market value then it’s CGT and/or IHT

WordIsBond
28th November 2018, 17:29
There is usually little reason for having different classes of shares if they all have the same rights, unless you want to make the classes separately redeemable or such.
All shares have the same voting rights.

Class A shares (90% of total shares) are owned by my bride and me, 45% each.

Class B shares are owned by PAYE employees and subcontractors roughly in proportion to their contribution to our contracting revenue stream. Two employees have gifted half of their shares to spouses. Effectively, we use dividends on Class B shares as a tax-efficient bonus scheme. It does mean that if someone has a less productive year they will still get a proportional take on the dividends, but that fosters a team mindset which is useful because many of our contracts end up being team projects anyway. Class B shares are indeed separately redeemable but that is not the only purpose or even the primary one for having them. The purpose was to give employees an equity stake and profit sharing (that's definitely a business reason and one that HMG seems to think is good) without ceding control of the company (that's also definitely a business reason). Class B shares receive more total dividends than Class A. To accomplish that without alphabet shares would give up control.

Class C shares came into existence because one employee left the contracting wing to pursue an R&D project as I described in an earlier comment. The shareholding reflects the business reality that we have two different businesses going now.

It's hard to imagine a business reason for a one-man band to use alphabet shares. Advisors may be recommending them for spouses to take advantage of the £2K dividend allowance. That makes tax sense but it is hard to come up with a reason that it helps the business. The amount involved is small enough that HMRC may never challenge it.

WordIsBond
28th November 2018, 17:32
Nothing to elaborate if you pay divi to your dad.
The money will never come back to you, but he might buy a chocolate for the kid when he visits.
So it depends.
OK, so you want to give your parents some money by giving them shares, and you are counting on it never being provable that the money is going to come back to you.

How much money are we talking here?

northernladuk
28th November 2018, 17:42
OK, so you want to give your parents some money by giving them shares, and you are counting on it never being provable that the money is going to come back to you.

How much money are we talking here?As much as can evade the most tax..

meridian
28th November 2018, 18:35
As much as can evade the most tax..

It’s not as far-fetched as it sounds.

The company will need to pay full tax on pre-dividend income anyway. Any saving will come from splitting the dividends sufficiently so that OP and his beneficiary (say, Dad) are both under the higher rate tax threshold.

Dad will now need to furnish a self-assessment every year and include these dividends, so unless he does it himself that will be extra for the accountant. Plus he’s now brought himself to the attention of HMRC.

Any hint that the income is coming back from Dad to son will be taken as evasion and taxed in full plus penalties. So any future loan for, say, a deposit on a house will need to be drawn up legally as a loan (with interest, etc) to avoid any suggestion of impropriety.

Apart from having to now furnish a self assessment return, it looks like a winner for Dad.

northernladuk
28th November 2018, 19:17
It’s not as far-fetched as it sounds.

The company will need to pay full tax on pre-dividend income anyway. Any saving will come from splitting the dividends sufficiently so that OP and his beneficiary (say, Dad) are both under the higher rate tax threshold.

Dad will now need to furnish a self-assessment every year and include these dividends, so unless he does it himself that will be extra for the accountant. Plus he’s now brought himself to the attention of HMRC.

Any hint that the income is coming back from Dad to son will be taken as evasion and taxed in full plus penalties. So any future loan for, say, a deposit on a house will need to be drawn up legally as a loan (with interest, etc) to avoid any suggestion of impropriety.

Apart from having to now furnish a self assessment return, it looks like a winner for Dad.

He doesn't necessarily have to file an SA. Depends how much we are talking.

And it might be a winner for dad but it won't be for the contractor.

How much could the settlements legislation S624 ITTOIA 2005 cost contractors? (https://www.contractorcalculator.co.uk/settlements_legislation_s624_cost_contractors.aspx )

meridian
28th November 2018, 20:24
He doesn't necessarily have to file an SA. Depends how much we are talking.

And it might be a winner for dad but it won't be for the contractor.

How much could the settlements legislation S624 ITTOIA 2005 cost contractors? (https://www.contractorcalculator.co.uk/settlements_legislation_s624_cost_contractors.aspx )

Of course. I’m simply saying that it’s not as clear cut as some posters seem to think it is.

From a link on the page you linked to above:

Contractor guide to splitting dividends (https://www.contractorcalculator.co.uk/contractor_guide_splitting_dividends.aspx)


The spousal exemption confirm by the Arctic Systems case only applies to a non-fee-earning spouse or civil partner, and not a non-fee-earning partner, family member or friend.

Therefore to avoid being caught in the settlements legislation trap, it is recommended that the shareholding non-spouse becomes a director of the company and plays a significant role in the management of the company. In addition, the share allocation should reflect the work undertaken by the two parties; so this is likely to lead to splits like 60:40 or 70:30, rather than the traditional 50:50.

The shareholder and director who is not the main fee earner and not a spouse or civil partner should clearly have a role in the business to justify earning the dividends. This could be managing administration, so that the contractor is completely free to focus on fee earning, or doing some marketing. A partnership with one director earning fees and the other ensuring they are able to do so and being paid, say, 30% of the dividend is perfectly legitimate.

Typical support tasks for a non-fee-earner which is not a spouse include holding the company minute book, bookkeeping and managing the money, answering calls and correspondence, plus marketing, which might include searching for contract opportunities and running the company website.

northernladuk
28th November 2018, 20:49
Of course. I’m simply saying that it’s not as clear cut as some posters seem to think it is.

From a link on the page you linked to above:

Contractor guide to splitting dividends (https://www.contractorcalculator.co.uk/contractor_guide_splitting_dividends.aspx)It's not clear cut. It's very complicated. That it makes it a bad idea. If it had little risk and was advisable then we'd all be doing it. The fact we don't speaks volumes.

pscont
29th November 2018, 09:54
It's not clear cut. It's very complicated. That it makes it a bad idea. If it had little risk and was advisable then we'd all be doing it. The fact we don't speaks volumes.

It is risky, I admit.

Just wondering how can a family business survive, (not IT one) but the above explains it. And still....

Say you have a advertising company as a family business so it is you, spouse and 4 parents. Shares: 51%, 49% regulars and 1 x A,B,C, and D. Parents are not directors - could be subcontractors or on commission.

This is a creative business, so very hard to prove that anyone of the parents doesn't bring the majority of the income for any given project by coming up with the best advert idea.

Then paying them as much/little divi as their allowances can absorb. HMRC may argue but how can they prove any settlement in this case?

I appreciate the above is very specific case but if I think more I will come up with more like this.

WTFH
29th November 2018, 10:23
Say you have a advertising company as a family business so it is you, spouse and 4 parents. Shares: 51%, 49% regulars and 1 x A,B,C, and D. Parents are not directors - could be subcontractors or on commission.

This is a creative business, so very hard to prove that anyone of the parents doesn't bring the majority of the income for any given project by coming up with the best advert idea.

Then paying them as much/little divi as their allowances can absorb. HMRC may argue but how can they prove any settlement in this case?

I appreciate the above is very specific case but if I think more I will come up with more like this.


OK, rather than trying to come up with specific cases that you have imagined so that you can try to argue one way or another, maybe you should stick to the practical example of your current company, the type of business it does and what you are wanting to achieve.

Cause it sounds like all you are doing is dreaming up hypothetical scenarios to try to commit tax fraud.

In a previous hypothetical scenario of yours, you didn't have a wife or kids, but then the next thing was your parents were buying presents for your kids - maybe a mars bar, maybe a ferrari for their 18th, etc.

tomtomagain
29th November 2018, 12:23
For a "standard" contractor, the new IR35 regime where income is taxed at source by the agency would make most of this rather pointless.

pscont
29th November 2018, 12:33
For a "standard" contractor, the new IR35 regime where income is taxed at source by the agency would make most of this rather pointless.

<mod snip> Mind your language </modsnip>

WTFH
29th November 2018, 13:28
184?

d000hg
29th November 2018, 13:34
I asked about this in accounting the other day, hadn't seen this one (why is it in general?)

If the OP wishes to read it.

northernladuk
29th November 2018, 14:15
I asked about this in accounting the other day, hadn't seen this one (why is it in general?)

If the OP wishes to read it.Because the OP is a cockwomble.

Instead of looking at a situation and investigating it he's just throwing ideas around to evade tax without putting any thought or research in to it. Have a look at his started thread history.

meridian
29th November 2018, 18:13
HMRC may argue but how can they prove any settlement in this case?.

Their modus operandi is usually to send you a bill for the back taxes first, and then it’s up to you to argue otherwise. They won’t need to prove settlement, it’s up to you to prove that it’s not.