S660A advice from item on home page

[mjshrimpton]

<snip>
HMRC have tried to argue that ordinary shares in IT service companies are “substantially a right to income”, avoid this by building up the company’s reserves so that there is cash in the company’s bank and put every last bit of equipment into the balance sheet. Avoid paying dividends into joint accounts at all costs
</snip>

Forgive the naivety, but is the building up of reserves in the company therefore an attempt to prove it is not just the vehicle for contract income and distribution of that income, but a genuine business attempting to grow and develop.

How much do people on here rely on building up reserves. I am planning to, and with luck might have about £30k left over this year, even after paying divis a bit over the HRT (baby on the way, stuff to pay for, need the money).

Also have wife who I could gift to........

[malvolio]

I think you should wait a few weeks and see what the result of the Arctic case is, before jumping on to any S660a changes. IF we do lose (and that we as in K small businesses), a lot of people will have a problem. If we win - which we should - gifting the other half a share is a good idea if they are not paying tax themselves. But wait for the judgement.

That said, keeping money in the company is not a bad thing, if you can get decent interest on it. There are no rules that say you have to pay dividends. There are rules that say you have to trade solvently, so having a reserve covers any periods on the bench - like me, who's been dossing around for most of the last year (that reminds me - I think I really need to get back to fee-earning now... )

[mjshrimpton]

I think you should wait a few weeks and see what the result of the Arctic case is, before jumping on to any S660a changes. IF we do lose (and that we as in K small businesses), a lot of people will have a problem. If we win - which we should - gifting the other half a share is a good idea if they are not paying tax themselves. But wait for the judgement.

That said, keeping money in the company is not a bad thing, if you can get decent interest on it. There are no rules that say you have to pay dividends. There are rules that say you have to trade solvently, so having a reserve covers any periods on the bench - like me, who's been dossing around for most of the last year (that reminds me - I think I really need to get back to fee-earning now... )

Absolutely - not going to do anything apart from a small toast to the Jones' when they win. And then phone the accountants and get proper advice.

I want some bench time with the new nipper, so I was planning to try and build up 6 months money and then take 3 months out if possible. did it last time and it was good, but got sent back out to work after 6 weeks as I was not helping.......

[Jason D]

Keep the champagne on ice should the Jones's win - the legislation will be changed before you can say 'sore loser'