Company formation error - advice needed pls

[dannya]

Hello and Seaon's Greetings!

I'll briefly describe our situation below:

In May my husband lost his job and began working as a Contractor. Having studied our options we chose to start our own Limited Company with myself as the Company Secretary and my husband as a Director. I do not work elsewhere but receive a small salary for Company Secretarial duties.

The firm of accountants that formed our company dealt with the share structure and put all the shares in my husband's name. I have recently discovered that this does not minimise our tax liability and we will lose out by several thousands of pounds as my husband has already exceeded his personal tax allowance this year, while I have the majority of mine left. N.B my husband is starting a permant staff position on 1 March 10 so it will not be a long term situation.

My questions are these:
Can share allocation be altered retrospectively if an error was made on formation and how is this performed? It is still the same tax year. Also, is there a professional body that I can complain to over their incompetence?

I thank you for any responses that you are able to give me as I don't want this issue to spoil our family Christmas.

[sweetandsour]

I don't know about the mechanisms of altering the share capital but I think that transfers between spouses should not present any significant problems.

As for complaining about the advice from the accountant, do you realise that the current government have been attacking arrangements to split income between spouses for several years now and have promised legislation to make it impossible?

I suspect your accountant will claim that they are erring on the side of caution.

[BolshieBastard]

I don't know about the mechanisms of altering the share capital but I think that transfers between spouses should not present any significant problems.

As for complaining about the advice from the accountant, do you realise that the current government have been attacking arrangements to split income between spouses for several years now and have promised legislation to make it impossible?

I suspect your accountant will claim that they are erring on the side of caution.

Very much doubt it. S660 is dead in the water. They'll say they were not told the share capital should have been split 50 /50. Very poor on the accountants part not to point this fact out to a new husband and wife ltd co set up.

I'd start looking for a new accountant immediately if I were the OP.

I very much doubt the share capital can be change retrospectively. Nothing to stop it being done going forward except however the cost. If the ltd co now has working capital in the bank, I think the wife must buy her share of this capital at full price ie if the co has say 15k in the bank, she may have to pay 7.5k to buy her 'share.'

[xoggoth]

Do you really mean ALL the shares were allocated to husband or is it that shares were only allocated to him? A company usually has a number of shares to start, probably 100, and it would be normal to only issue as many as required, ie one shareholder, one share.

If that is the case you can just issue another to you. Otherwise, as sweet and sour says you can transfer some shares. You can invent different sorts of share with different rights too. You may need to send a form to companies house, so long since I did it I can't remember but it should be explained on their site.

[Paddy]

Hello and Seaon's Greetings!

I'll briefly describe our situation below:

In May my husband lost his job and began working as a Contractor. Having studied our options we chose to start our own Limited Company with myself as the Company Secretary and my husband as a Director. I do not work elsewhere but receive a small salary for Company Secretarial duties.

The firm of accountants that formed our company dealt with the share structure and put all the shares in my husband's name. I have recently discovered that this does not minimise our tax liability and we will lose out by several thousands of pounds as my husband has already exceeded his personal tax allowance this year, while I have the majority of mine left. N.B my husband is starting a permant staff position on 1 March 10 so it will not be a long term situation.

My questions are these:
Can share allocation be altered retrospectively if an error was made on formation and how is this performed? It is still the same tax year. Also, is there a professional body that I can complain to over their incompetence?

I thank you for any responses that you are able to give me as I don't want this issue to spoil our family Christmas.

Share dealings are controlled by the company owners ie: shareholders and directors. All you need to do is to amend the company register and show the corrections on your annual return to Companies House.

[lje]

To allocate shares which are currently approved but unallocated I believe you need to fill in a form and send it in to Companies House within a month.

http://www.companieshouse.gov.uk/for..._of_shares.pdf

For details see section 9 (Notice of Allotment) at http://www.companieshouse.gov.uk/abo.../gp3.shtml#ch7.

[Sockpuppet]

My questions are these:
Can share allocation be altered retrospectively if an error was made on formation and how is this performed? It is still the same tax year. Also, is there a professional body that I can complain to over their incompetence?

I thank you for any responses that you are able to give me as I don't want this issue to spoil our family Christmas.

Depends how much money we are talking. You can't retrospectively change the shares.

You can change the share structure into your name by allocating some more and then buying them from the company.

Its also possible for your husband to sell/gift you some of his shares so no more shares need to be allocated.

Then just distribute shares as normal.

There is a professional body you can complain to however not really worth it as they accountant will say they did what you asked as unless you have it in writing you asked something else how are you going to prove it. Also its not an accountants duty to minimise your tax liability just make sure you don't break the law. If they can accomplish both then great but nothing saying that they have to

[Hex]

My questions are these:
Can share allocation be altered retrospectively if an error was made on formation and how is this performed? It is still the same tax year. Also, is there a professional body that I can complain to over their incompetence?

I thank you for any responses that you are able to give me as I don't want this issue to spoil our family Christmas.

A similar issue was raised on Shout99 website here: http://www.shout99.com/contractors/s...1;id=66094;n=0

Roger Sinclair warns you to be careful if giving shares to someone who is an officer or employee of the company already. He says:

"Second, particular care is needed in giving shares to someone who is an officer (eg co sec) or employee of a company, if one is to avoid the rules which treat acquisition of shares by such persons as a benefit of the employment, and so taxable as such.

An approach worth considering (and probably more robust longer term) would be to form a new co with split shareholding for ongoing trading. "