Restructuring share structure of an LTD

[era]

Hi
The topic about dividend spreading to spouse gave me an idea. I am not sure if it will work and how to do it.
Currently I have an LTD with 100 ordinary shares of £1/each - 51 for me and 49 for the wife. Nothing special - we use the 2 divi allowances of 5000.

My idea is to restructure the share capital of the ltd to be: 51 Ordinary, 25 A Ordinary, 12 B Ordinary, 12 C Ordinary. All of the 4 classes has this Prescribed particulars: Each share has full rights in the company with respect to voting, dividends and distributions.


The idea is to myself to hold 51 shares, my wife 24 A, my mother 12 B and my father 12 C.

Questions:
Can I restructure company share/capital structure?
Will the above setup bring any problems?

[northernladuk]

Alphabet shares? Family? Sounds like an utter disaster that.

Why would you give quarter of your company money away to your parents.. You aren't going to put some convuluted scheme in to recoup money are you? Why B and C to father mother? Because it sounds nice?

Of course you can restructure your company? Will it bring problems... I can't help but thinking yes as both parents and alphabet shares are warned against and you are using both.

I think you are just guessing here and the it was bolded out that the poster got professional advice so why are you not speaking to your accountant first?

[malvolio]

You can, but it would be illegal under the provisions of ITEPA 2003 Section S660A et seq... Plus there is no sound business reason for doing this, so HMRC will deem all the income to be you and your wife's.

You may consider those to be two slight problems...

[SlipTheJab]

Hi
The topic about dividend spreading to spouse gave me an idea. I am not sure if it will work and how to do it.
Currently I have an LTD with 100 ordinary shares of £1/each - 51 for me and 49 for the wife. Nothing special - we use the 2 divi allowances of 5000.

My idea is to restructure the share capital of the ltd to be: 51 Ordinary, 25 A Ordinary, 12 B Ordinary, 12 C Ordinary. All of the 4 classes has this Prescribed particulars: Each share has full rights in the company with respect to voting, dividends and distributions.


The idea is to myself to hold 51 shares, my wife 24 A, my mother 12 B and my father 12 C.

Questions:
Can I restructure company share/capital structure?
Will the above setup bring any problems?

[dingdong]

I think you'd find HMRC's massively powerful Connect software would be flagging you for investigation in no time at all.

[VectraMan]

If each share class has the same rights and dividends, what's the point?

[northernladuk]

If each share class has the same rights and dividends, what's the point?

It's either because it leaves classes D E and F available to give his kids or because he's not really got a clue what he's doing?

[Pondlife]

If each share class has the same rights and dividends, what's the point?

Because he can issue different divvies to the different share classes AFAIK. So one year he, his wife and his folks all get the £5K free but then next year he can distribute more or less to each class as his and his families tax situation changes.

[northernladuk]

Because he can issue different divvies to the different share classes AFAIK. So one year he, his wife and his folks all get the £5K free but then next year he can distribute more or less to each class as his and his families tax situation changes.

I think he means why Class B for dad and Class C for mum.

[pr1]

Questions:
Can I restructure company share/capital structure?
Will the above setup bring any problems?

Answers:
Yes
Yes