Adding a foreign shareholder / director

[conejo1979]

Hi there,

Well, my second post in a year (on my first I was called troll!!)

I wonder if I can get any advice regarding my company situation

I currently have a limited company (project engineering services ) with two shareholders 50/50 I am the director and the employee on the company. A pretty modest turnover of 60k /year..

I paid myself £135 /week and the rest is dividends between the two shareholders..

The second shareholder wants to leave the company..

Can I incorporate a foreign shareholder instead in to my company.? I understand that from the tax point of view, I will not be gaining anything due to the fact that the profits are already being taxed at 20% before any dividend is taken into account.. also, the foreign domiciled/resident will not have to pay any UK tax on his dividend

Basically what I am trying to achieve is to reduce as much as I can my yearly taxable income..

How easy is to do this? Perhaps make him a 70% shareholder?

Tanks in advance

[stek]

Income splitting? Read------------------------->

[northernladuk]

Why would you give your money to someone else? That isn't very tax efficient...

If you mean distribute your money via shareholders to reduce tax and then them pay it back to you then you are neck deep in it.

If you are talking about a family member that isn't a spouse then the answer is no.

Do you really need to have shareholders with only a 60k turnover? Surely you are inviting a lot more grief than tax you are saving..

I presume you have an accountant?

[northernladuk]

Check this post and have a fundamental think about your situation before you even start on offshore shareholders..

http://forums.contractoruk.com/accou...reholders.html

[TheFaQQer]

The second shareholder wants to leave the company..

Shareholders don't "leave" a company - they get rid of the shares that they hold in the company.

Can I incorporate a foreign shareholder instead in to my company.?

Yes - sell them some shares.

[conejo1979]

Check this post and have a fundamental think about your situation before you even start on offshore shareholders..

http://forums.contractoruk.com/accou...reholders.html

Thnaks for the fast replies

Family member will not be a shareholder..

Now it makes absolutely sense not to do it from the TAX point of view.. in fact, I will not “make any money” from the tax “savings” , so in theory the tax man will carry out receiving what he is receiving at the moment..

Now, my aim its purely to reduce my taxable or earning “capability” (showing myself as poor as possible on my tax returns)

The only person I will upset, will be my future divorcee ex… as due to my reduced yearly income and “proved earning “, the settlement will be more fairer

As you could see its got nothing to do with paying les tax..

Ps: please I am not looking for morality or “I believe this or that” just facts

ps: I do a an accountant (but is those internet agencies that have everything pretty much set up.. so anything different, they cant be asked to investigate)

[stek]

So, what you are saying reading between the lines is the other shareholder will tip some or all of the divs back to you or are you just giving money away?

Why not just leave it in the company?

[conejo1979]

So, what you are saying reading between the lines is the other shareholder will tip some or all of the divs back to you or are you just giving money away?

Why not just leave it in the company?

More or less .. he will just be paying me some old debt using his dividends..

Unfortunately as you could see, my turnover is pretty poor, so keeping money in the company will be a painful task.. also as per the latest big court ruling… divorce proceedings can milk limited co. money (oil tycoon case)

[northernladuk]

More or less .. he will just be paying me some old debt using his dividends..

Unfortunately as you could see, my turnover is pretty poor, so keeping money in the company will be a painful task.. also as per the latest big court ruling… divorce proceedings can milk limited co. money (oil tycoon case)

So let me get this straight... You are going to give him your money to give you back.. How exactly is that him paying of his debt? HMRC are going have a field day with you.

You are obviously fiddling your business which is aggressive tax avoidance at best and I could see a case for evasion here.

Time to think about running your business properly hey?

[TheFaQQer]

More or less .. he will just be paying me some old debt using his dividends..

So not repaying the debt at all, just taking money from you to reduce your tax bill and then giving it back to you.

Unfortunately as you could see, my turnover is pretty poor, so keeping money in the company will be a painful task.

How is it painful to not do anything with it?

. also as per the latest big court ruling… divorce proceedings can milk limited co. money (oil tycoon case)

She'll still get half of everything. So, you buy back the 50% from whoever owns it at the moment (if it's her, then why should she sell to you?), and then sell 70% to someone else. Then she takes half of what's left with you anyway, so you now need to pay higher dividends to make up for that loss, or a big lump sum up front, which you can pay for from the sale of 70% of the company. After that, if she's that bitter, she then rings HMRC and tells them that you are avoiding tax by giving your company to an off-shore entity, and they come and ream you.

Sounds like a good plan to me