splitting company shares

[ASB]

Like malvolio said, they're not spending 500k on the Arctic case for nothing. They're bound to try and recover as much tax as possible regardless of what you do now.

turbo

I think the IR are more concerned about the situation gonig forwards - provided whatever guidance they issue is followed. However, malvolios view is equally possible.

I personally think the reason they are spending the 500k is so they can ensure the existing legislation applies. I believe the IR should and will lose, but I could be just as wrong as about that.

[XLMonkey]

Erm, could be wrong, but think that was what I just said:

1. I wasn't suggesting that you continue to operate by the old rules IF the Arctic case is lost. I was saying that for the moment, Arctic won their case, so you are entitled to submit a tax return on the basis that the settlement legislation doesn't apply.
2. Liable to full tax = 25% (since that is the applicable rate on dividend income if you are a higher rate tax payer)
3. On this one you might be right , but the whole point of the OP's thread was that his wife wouldn't be earning much or paying tax, so they wouldn't have made use of the relief in the first place.

The point I was trying to make was that you can take advantage of the tax relief now, and take the risk that you become liable to pay it back later on. But, if you wait until later on, then you cannot retrospectively take advantage of the tax relief.

[ASB]

Erm, could be wrong, but think that was what I just said:

I failed to make my point. A regular occurance . The real point was 3 because it is potentially expensive.

Shareholder 1 and 2 get [dividend] income of 100 k each.

There is approxiamtely 15k of higher rate tax paid by each shareholder. So 30k is phyiscally handed over to the IR. Now, it all goes wrong and IR win.

Shareholder 1 is assessed as having income of 200k. This needs 40k of higher rate tax paying. So you stump up 25k - i.e. 40k less the 15k originally paid.

Now Shareholder 2 has income of zero - the 100k allocated to them was never theirs. But they have paid 15k of higher rate tax. How do you get it back? They have to reopen the year. If the normal enquiry window is closed (1 year I think) there is no guarantee that this will be allowed.

So, what I was trying to say was that if you are in a position where a second shareholder pays higher rate tax it might be that it becomes non reclaimable depending on the timing of the enquiry.

In practical terms this may well not be a problem - but it both shareholders end up at 40% taxpayers there is a possible risk of not being able to reclaim tax that has been paid.

[XLMonkey]

ah, now I see what you mean. That could sting a bit !!