[Tax Planning][17/18] Company structure - spouse

[TheCyclingProgrammer]

Aren't most of the waiver cases down to whether the company had funds to pay a dividend that could then be waived? I forget the exact details but I thought that one was something like the company needed £300 million to pay the dividend that the husband waived to pay £30k to the wife. Something like that.

That did play a part in the overall decision, however IIRC the case looked at the picture as a whole and it was determined that the regular use of waivers to effectively shift income from a higher rate tax payer to a lower rate tax payer in order to avoid tax constituted an arrangement and therefore a settlement in its own right.

I'd have to refresh my memory of the details of the case however the precise details aren't really the point here, it was more that HMRC have managed to find otherwise to attack dividend distributions using the settlements legislation without having to attack the underlying share transaction. They could do it again, especially if there's significant tax to be recouped.

[Alan @ BroomeAffinity]

Damn that's a good memory...

I still bear the mental scars from when, as a fresh-faced and callow youth, I was called a buffoon by the great man. Alas, alas.

[northernladuk]

I still bear the mental scars from when, as a fresh-faced and callow youth, I was called a buffoon by the great man. Alas, alas.

I'd give my right arm to be have only been called a buffoon by such an esteemed character and only once in such a long time. Getting through a day without something similar is an achievement for me

[WordIsBond]

Furthermore, the OP is setting the company up just now and so there is no value in any of the shares that are being given to anyone - it would be difficult to argue that there has been any settlement at all, since the company has no value.

I doubt this point is relevant to the question. HMRC is certainly not likely to argue anything about the value of shares given to a spouse, whether it is a new company or an existing one with reserves of millions of pounds.

The question at hand is whether the shares are given, not to confer partial ownership, but instead are a rather transparent fiction to obscure an inappropriate (as far as tax is concerned) settlement of income. If HMRC believe that is going on they will be inclined to target it, whether the company had value at the time of the gift of shares or not.

[WordIsBond]

Basically I agree with TCP and WiB above.

Only them???

Let me explain this to you. When Mick Jagger says, "I can't get no satisfaction," and millions of groupies agree with him, you don't say, "I agree with the groupies," you say, "I agree with Mick Jagger."

I'm happy to have you as one of my groupies, though, if it makes you feel better. Can't speak for TCP on the subject, though.

[northernladuk]

Let me explain this to you. When Mick Jagger says, "I can't get no satisfaction," and millions of groupies agree with him, you don't say, "I agree with the groupies," you say, "I agree with Mick Jagger."

I'm happy to have you as one of my groupies, though, if it makes you feel better. Can't speak for TCP on the subject, though.

And thank you

[eazy]

[QUOTE=RonBW;2365595]

NO THEY DID NOT. Geoff and Diana Jones did NOT win on appeal - HMRC LOST ON APPEAL. That's a huge difference - the Jones won at EVERY stage of the legal process. To imply that that they needed to appeal the judgement to win is highly inaccurate.
QUOTE]

The above is not 100% true, the first two rounds were won by the HMRC. This case would have not got further than the special commissioners without the backing from PCG (IPSE).


Sep 2004 –HMRC special commissioners – HMRC Win

Mar 2005 –High Court – HMRC Win


The arctic systems case and settlements legislation | Tax | Library | ICAEW