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  1. #1

    Nervous Newbie


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    Question Appointing mother as Ltd Co shareholder

    Hello all,

    I am currently contracting and looking to start up a new company with my mother as a 30% shareholder. She is unemployed and I may ask her to look after my financials and invoicing etc in return for dividends or may just gift them to her because she's lovely.

    Is this something the HMRC can chase me for?

    Obviously if they were to spy on me and watch her hand me back x in cash every month then it would look suspect but is there any issue with the above?

    Thanks
    SM

  2. #2
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    Godlike


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    The only issue is that you may be taxed on the behefit she gets.

  3. #3

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    Search the forum.
    Last edited by TheCyclingProgrammer; 26th February 2015 at 07:58.

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    No

    Section 660 - S660 / S660a Advice :: Husband and Wife Tax :: Income Shifting Legislation


    Is this guide a little dated now? Have there been any new developments?
    Last edited by Pondlife; 26th February 2015 at 08:12.

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    Shareholders aren't appointed.
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    Default .....

    Quote Originally Posted by spyman View Post
    Hello all,

    I am currently contracting and looking to start up a new company with my mother as a 30% shareholder. She is unemployed and I may ask her to look after my financials and invoicing etc in return for dividends or may just gift them to her because she's lovely.

    Is this something the HMRC can chase me for?

    Obviously if they were to spy on me and watch her hand me back x in cash every month then it would look suspect but is there any issue with the above?

    Thanks
    SM
    The whiff of sockie is strong with this one....

  7. #7

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    Quote Originally Posted by Pondlife View Post
    Is this guide a little dated now? Have there been any new developments?
    The guide probably is dated (for starters the legislation is s624 now, not s660) and the situation isn't clear cut when non-spouses are involved (the legislation is generally aimed at spouses, minor children and trust situations and there aren't any notable cases involving parties other than the above that I'm aware of), but perhaps the most important thing is that HMRC activity in this area has been relatively quiet since Arctic. The situation for spouses, when there is an outright gift of shares, remains the same as it was since the Arctic case as finalised. Some notable cases involving dividend waivers have come about but not much else.
    Last edited by TheCyclingProgrammer; 26th February 2015 at 09:23.

  8. #8

    Should post faster

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    Quote Originally Posted by spyman View Post
    Hello all,

    I am currently contracting and looking to start up a new company with my mother as a 30% shareholder. She is unemployed and I may ask her to look after my financials and invoicing etc in return for dividends or may just gift them to her because she's lovely.

    Is this something the HMRC can chase me for?

    Obviously if they were to spy on me and watch her hand me back x in cash every month then it would look suspect but is there any issue with the above?

    Thanks
    SM
    I don't believe you will find any definitive guide or advice from HMRC as it is not strictly an HMRC role to police company shareholders. They deal with the calculation and collection of different taxes and are interested in spotting tax avoidance - when necessary. In my experience, it is down to the individual Inspector to interpret the rules as they see fit at that time.

    HMRC have to be very careful not to issue strict guidance on a complex issue such as "tax avoidance and shareholdings". The one thing you can be sure of - the moment they release absolute guidance on any issue, somebody then finds a way around it, using the guidance issued.

    Just to illustrate the point. Back in the Summer I was at an employer compliance review for a large client and they had two Inspectors present. I asked both of them for an opinion of whether or not they believe 5 per day is acceptable for a contractor to claim for lunch. One stated yes - for about 28 days and the other stated sure, no problem - for any period up to a year.

    Bizarre but true.

  9. #9

    Ddraig Goch


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    Another point. She doesnt have to do any work to be a shareholder so forget that link.

    e.g. Do you have post office/barclays/BT shares? Do they ask you to do any work for them? Exactly.

    Shareholding is zero to do with any work you do.

    BUT, as someone said S660 comes into play.

    I wouldnt do it. Its just too obvious what you're up to.
    Rhyddid i lofnod psychocandy!!!!

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