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  1. #11

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    Quote Originally Posted by northernladuk View Post
    Oh dear.....
    You think the accountants are wrong? Do explain.

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    Quote Originally Posted by missinggreenfields View Post
    You think the accountants are wrong?
    All the advice on this thread and the rather rose tinted article appear to suggest so but we don't know the details so hard to say.
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    Quote Originally Posted by northernladuk View Post
    All the advice on this thread and the rather rose tinted article appear to suggest so but we don't know the details so hard to say.
    Actually, that's not correct. I refer you to:

    Quote Originally Posted by TheCyclingProgrammer View Post
    My understanding with alphabet shares is that the risk arises when different classes of share are used so that the lower rate paying shareholder (e.g. the non-working spouse) can take more dividends than the higher rate paying shareholder, disproportionally to the shareholding percentage, the risk being that the arrangement itself can constitute a settlement (over and above the original gift of shares, similar to how HMRC attack waivers).

    With the new dividend tax, I guess people are going to be re-visting alphabet shares as a convenient way of limiting how much the lower paid shareholder receives without coming up with convoluted share percentages to make it work or making use of (arguably riskier) waivers.

    The Intouch guide does seem to cover most of the relevant points, with probably the most important being that any alphabet shares should be ordinary shares of equivalent rank and sharing the same rights otherwise the gift (if between spouses or civil partners) itself would be caught by the settlements legislation by default.
    particularly the last sentence.

    I have a company with two shares. They are ordinary shares. They have the same rights as each other. They were created when the value of the company was 0. I took professional advice from my accountant. I am yet to declare a dividend because the company hasn't been trading long and we have no need to declare a dividend at the moment.

    So - why the "oh dear"? If you can explain how your expertise is greater than the accountants, I'm sure I'm not the only poster who would love to hear that. If the article is wrong, specifically in which areas - since InTouch regularly read and post on the forums, I'm sure they would welcome your expertise in explaining where they are incorrect in law.

    Also FWIW, it's not only one accountant that has recommended this approach.

  4. #14

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    Quote Originally Posted by missinggreenfields View Post
    Which is the advice I used for my company - one class A for me, one class B for my wife. We both own 50% of the company.
    not sure you're right.

    Company Law Solutions : Alphabet shares
    "companies want the flexibility to pay dividends that are not proportionate to the shareholdings of the the individuals"

    So for you to suggest that with A and one B share you have a 50/50 split doesn't sound right. Sounds like you are the 100% owner and your wife has 100% of the B shares.

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    Quote Originally Posted by Lance View Post
    So for you to suggest that with A and one B share you have a 50/50 split doesn't sound right. Sounds like you are the 100% owner and your wife has 100% of the B shares.
    Not according to the PSC register at Companies House.

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    As I said it depends on the details and lo and behold more details appear.... In all the articles it talks about 'less risky' so why not do it as mentioned in TCP's post.

    We've had endless posts on here from accountants avoiding Alphabet shares. Here is another with at least 3 accountants being pretty clear on it.

    http://forums.contractoruk.com/accou...et-shares.html

    It's pretty old and the consensus might be changing with the new divi tax coming out but googling alphabet shares all the articles have a 'but or 'might' and most mention risk. Doing it with ordinary shares this wouldn't be the case.

    With so many ifs and buts around it it's not unreasonable to expect it to attract more attention than a normal set up and I don't deny you'll probably get away with it but the experience won't be pleasant if they come looking.
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    Quote Originally Posted by missinggreenfields View Post
    Not according to the PSC register at Companies House.
    Are you sure it makes the distinctions between rights and classes not just a flat count of shares issued which isn't truly the case? The CompanyCheck site doesn't do a very good job of this. Might be different if you are a paid member.
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    Quote Originally Posted by missinggreenfields View Post
    Not according to the PSC register at Companies House.
    what has control got to do with ownership?
    What does the shareholder declaration say?

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    Quote Originally Posted by northernladuk View Post
    As I said it depends on the details and lo and behold more details appear....
    Apologies - I'd presumed that it would be sufficient to say "I followed their advice" and you would understand what I had done. I didn't realise that you needed more details than that given their advice was on their website. The only detail that I added is the irrelvant line about not paying any dividends yet, but next time I'll copy the article and stick that in here if that will help you.

    Quote Originally Posted by northernladuk View Post
    In all the articles it talks about 'less risky' so why not do it as mentioned in TCP's post.
    Because that way has no flexibility built into it, both in terms of timing and amount to be paid. I like to have as few constraints on my business as possible.

    Quote Originally Posted by northernladuk View Post
    With so many ifs and buts around it it's not unreasonable to expect it to attract more attention than a normal set up and I don't deny you'll probably get away with it but the experience won't be pleasant if they come looking.
    What specifically do you think I am getting away with?

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    Quote Originally Posted by Lance View Post
    what has control got to do with ownership?
    Nothing - who mentioned control?

    However, the PSC register details who holds shares in the company, either directly or indirectly.

    Quote Originally Posted by Lance View Post
    What does the shareholder declaration say?
    Class of shares: A Ordinary
    Number allotted: 50
    Each share has full rights in the company with respect to voting, dividends and distributions.

    Class of shares: B Ordinary
    Number allotted: 50
    Each share has full rights in the company with respect to voting, dividends and distributions.

    Total number of shares: 100
    Total aggregate nominal value: 100

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