Limited Company share structure

[SimonInd]

I'm just about to form a limited company to start my first contract and the advice I'm receiving re:share structure is to make myself the sole shareholder. My wife doesn't work so I'd be keen to benefit from this, however with the recent Arctic Systems ruling everyone seems to be very cautious. My concern is that when the Revenue issues a definitive statement regarding Section 660A my company will have been trading for a few months and any redistribution of shares may be taxable.

Any advice on this would be appreciated

Thanks

Simon

[Bradley]

Re:660A

From the judgements it looks like

- make your wife a Director
- she should pay the "market value" for any shares

If the company is between contracts then the value of the shares shouldn't be much anyway.

[4Contractors]

Re: Re:660A

Does anyone have any idea how to judge the 'market value' of limited company shares - an algarithm would be really useful.

Bradley are you suggesting that the poster be the secretary or that his wife be director and secretary ?

[Bradley]

Reirectors

I'm suggesting two Directors.

The aim is to make the spouse more accountable therefore more at risk therefore more able to take large dividends

[SimonInd]

'Market Value'

If my wife paid half of the formation costs then I presume that would represent 'market value' at inception?

[Bradley]

Re:Valuation

If my wife paid half of the formation costs then I presume that would represent 'market value' at inception?

Not necessarily. If you had a contract in place but not started then that would boost the value of the company.

[silicondale]

Arctic was set up that way

Mrs Jones bought her share from the company formation agents - yet the senior special commissioner still decided that it was a 'gift' from Mr Jones. But then who said that tax, or law, or even tax law, had to have any connection with reality ?

[Bradley]

Re:Market Value

Mrs Jones bought her share from the company formation agents - yet the senior special commissioner still decided that it was a 'gift' from Mr Jones. But then who said that tax, or law, or even tax law, had to have any connection with reality ?

This was one of the areas that the senior commissioners argument fell down for me. What if that first contract had fallen through for whatever reason? Mrs would then have a share in a company with a very uncertain future. Surely the dividends she receives once the company becomes profitable are just reward for that early faith and the cash/effort to get things going?

I remember junk bonds from the 80's - virtually worthless because of the risks attached but with a big payout if things went OK. No-one suggested that the issuers should pick up the tax bill of the investors when the money was paid over then. Same principle here surely?

[cheekychap]

Re: Re:Market Value

Another tip is to use your wife's maiden name as this can raise you above the easier pickings ... if you get my drift!

[Robot]

Re: Re:Market Value

"Another tip is to use your wife's maiden name as this can raise you above the easier pickings ... if you get my drift!"


Can not see this working, you must state on the directors report of the accounts, the directors shareholding along with the spouses (could be family members also) shareholding, even though the spouse may not be a director.