Dividend split with partner - anyone change it save tax?

[psychocandy]

I know that generally 50/50 you're in the clear.....

Accountants seem to frown upon:-
1. Changing the share split too many times.
2. Making your OH the majority share holder (because they're not the earner)

Is there any legal basis to this though? Or definite guidelines?

Lot of tax to be saved possibly setting the split to the most advantageous. Anyone do this? Even as a one-off?

[malvolio]

I know that generally 50/50 you're in the clear.....

Accountants seem to frown upon:-
1. Changing the share split too many times.
2. Making your OH the majority share holder (because they're not the earner)

Is there any legal basis to this though? Or definite guidelines?

Lot of tax to be saved possibly setting the split to the most advantageous. Anyone do this? Even as a one-off?

I don't know. What do you think?

[northernladuk]

They don't like it because what you are trying to do is covered by general anti-abuse rule (GAAR). You are manipulating your tax affairs for no other reason than to gain an advantage that does not fit the situation of the company. Why would the wife get most of the money paying less of the tax for no business reason at all. You are aggressively avoiding tax and abusing the system.

Changing the split too many times is a blatant red flag that this is what you are doing and will attract attention you really do not want when you are doing what you are trying to do. If there is no BUSINESS reason to do it then you should not be doing it.

50/50 has been argued and proven to be OK. Anything else would not stand up so well. A non earning director getting more than the working one. No chance that will wash. So that's why 50/50 is advised. A couple of accountants on here have even gone as far as to say 55/45 is better just to favour the earning party but that just depend son which accountant you speak to.

If an industry professional has told you this why do you not believe them? Why do you not go to them and ask why they have given you that advice? Do you not think we would all be doing it and the accountant would advise it if it was OK? You think manipulating your company to save more tax than normal is going to be ok?

Also - Forgetting the tax side. Many agents insist that the contract is the majority shareholder. Having someone they have no relationship with controlling the company and not you is a risk. You are going to struggle to get contracts with the wife as a majority shareholder.

[northernladuk]

I don't know. What do you think?

He doesn't. That's the root of most of his silly problems.

[Lance]

Also - Forgetting the tax side. Many agents insist that the contract is the majority shareholder. Having someone they have no relationship with controlling the company and not you is a risk. You are going to struggle to get contracts with the wife as a majority shareholder.

THIS^^^^^ (and *cough* some tax advantage reasons *cough*) is why I have a 70/30 split.

[malvolio]

He doesn't. That's the root of most of his silly problems.

I know. Trying to answer his questions clearly doesn't work, and he's not interested in making any effort to understand the basics of his position, so let's stick to refusal to engage. Life's too short to waste on idiots.

[gisp]

GAAR might apply, in theory.
In reality, why dont you try it.
Just have the money aside and keep it for a few years, if HMRC come asking.

[northernladuk]

GAAR might apply, in theory.
In reality, why dont you try it.
Just have the money aside and keep it for a few years, if HMRC come asking.

Because it won't just be the money he puts aside. It will have interest added and a penalty of up to 200% of what is owed. In extreme circumstances it could be jail time and could affect his ability to be a director. His rank stupidity is not a defence.

To advise someone to give it a go because they don't know anyone that has been caught when it goes against all professional advice and case history is a pretty stupid bit of advice.

[yorkshirespud]

THIS^^^^^ (and *cough* some tax advantage reasons *cough*) is why I have a 70/30 split.

80/20 is a better split - as the 20% owning partner doesn’t need to be declared as a person of significant control as is less than 25%. The same applies to being able to pass special resolution of the company and the other partner cannot block them.