Contracting Arrangement Legitimacy?

[67CooperS]

Please poke holes in the following scenario for me as I am not 100% clear on all the legislation / quirks. Basically I am trying to negate the need for myself and my partner to both individually have a limited company... and to avoid what I perceive to be the composite structure where we are both director/share-holders of the same company.

I have created a limited company.
I am the sole director and share-holder.
My company engages my services with a client for which it bills the client.
I am paid a salary (as director).
I receive dividends (as a share holder).
** so far i imagine this describes every Ltd company set up **

Can my girlfriend become an employee of my limited company? (assuming a contract of employment is created)
Can my limited company then enagage her services with a client for which it bills the client.
Girlfriend is paid a salary (as employee)
I solely receive the dividends (as share-holder).

Will this create big head-aches for me re NHS contributions, holiday pay and insurance etc that I am not really considering (apart from the obvious financial 'exposure' she faces by not owning any of the company or having a claim to dividends).

I've probably answered my own question and determined two separate companies is the way to go, but would appreciate any comments.

Thanks,

Mark

[richy]

Sounds fine to me, just pay her the min wage (5.35 per hour), and cream the rest off in quarterly dividends etc!

[Bigbird]

What you describe as the "composite structure" is perfectly OK, you can both be directors, both be shareholders, both be engaged by seperate clients and even both have seperate classes of dividends or different levels of dividends so your dividends are not split equally if you want. Although HMRC may not like it this is still a perfectly legitimate and legal business model at the moment.

You are confusing "composite" and "MSC" I think, as most MSCs were operated under a composite rather than director-only structure.

What you can't do is pay dividends when your contract terms put a particular engagement within IR35 (this will apply per assignment, individually) or engage an MSC provider to sort out the paperwork for you.

If you are planning on a long-term business I would also suggest that you get a decent lawyer to draw up a cast-iron directors agreement that outlines exactly what either of you is entitled to should you split up though.