Husband - Wife shareholding

[rootsnall]

However I am also aware that the PMG did say penalties were not going to be sought in IR35 cases so maybe the same would apply here?

PMG ? Any articles/links on this ? If there are defo no related IR35 penalties then I'll sleep a little sounder.

[THEPUMA]

That very true. Of course one has had the benefit of the money in the meantime so in practice that limits the downside.

But, do you have a view on penalties? I really have no idea what happens here in fully contested cases. The only experience I have had of this was a general compliance review in which we negotiated settlement and penalties were eventually 20% which I understood was the minimum. However I am also aware that the PMG did say penalties were not going to be sought in IR35 cases so maybe the same would apply here?

My view is that it will depend on how clear cut the conclusion of the case is. If it is clearly held that tax is payable and your circumstances are identical, then penalties may be payable. I would have thought if you cooperate and disclose fully they are unlikely to exceed 20% and will in all probability be closer to 10%.

If, on the other hand, you have a valid defence for your treatment, they will probably be pleased to get the tax and interest.

But don't rely on this etc etc

[hattra]

Nevertheless the key point at issue in Arctic is whether or not a wife actively contributes to the creation and operation of a company merely by virtue of being married to her husband.

Curiously, it seems that when a marriage ends, the Courts usually do consider that a wife has made a major contribution to the creation & operation of a company, simply by virtue of being married to her husband - or am I just being a bitter old cynic?

[ASB]

PMG ? Any articles/links on this ? If there are defo no related IR35 penalties then I'll sleep a little sounder.

If you are in the PCG (I'm not anymore) you should be able to dig it up from their forums.

Alternatively I seem to recall it made it into Hansard, but I had a quick look around and turned up this:-

http://www.hmrc.gov.uk/IR35/penalty.htm

http://www.shout99.com/contractors/s...id=14074&n=300

Of course one needs to be able to reasonably show beleif of being outside IR35.

[rootsnall]

If you are in the PCG (I'm not anymore) you should be able to dig it up from their forums.

Alternatively I seem to recall it made it into Hansard, but I had a quick look around and turned up this:-

http://www.hmrc.gov.uk/IR35/penalty.htm

http://www.shout99.com/contractors/s...id=14074&n=300

Of course one needs to be able to reasonably show beleif of being outside IR35.

Thanks. I hadn't seen the statement in the second link before.

[oxtailsoup]

Artic

Interesting discussion. My wife and I hold a 50/50 shareholding.

My accountant advised me to take 100% shareholding in our limited company at first. But my wife is a self employed accounts trainer and also invoices a revenue through our company. Though no where near as high as mine currently.

My accountant then said that my wifes shareholding should be in proportion to her input. However......

Firstly my income in the company is not fixed. On a good year I may invoice £130k, on a really bad year I may invoice £0 ! (never happened but by the nature of the business it is variable). My wife invoices a lot less but it is consistant. And she has been a shareholder since day one.

Also my wife also does all the paperwork for the company (mine and hers) and is a part qualified accountant herself.

So in my mind her input could successfully be described as 50% in effort if not revenue.

My accountant (SJD) didn't really have an answer to this argument and agreed that there were no real guidelines. So I rang my local tax office to discuss it with them last year (just after Artic won the hearing). They didn't have a clue. They said they had no guidelines on this and agreed that as my wife was working full time for the business then she should be allowed 50% of the shares. Obviously this chat I had with the tax office was to be taken with a pinch of salt as they really had no idea. But that's the whole point, no one really has any clearly defined rules for this.

[malvolio]

Interesting discussion. My wife and I hold a 50/50 shareholding.
...snip...
But that's the whole point, no one really has any clearly defined rules for this.

Actually they do, the rules are quite clear. It's just that Hector has decided unilaterally to re-interpret them by ignoring precedent and the original, clearly stated intent of Parliament.

S660a was meant to stop Jack Hawkins gifting lumps of his income to his kids via shares they "owned" and paid no tax on but whose income he benefited from. It was never intended to apply to married couples, especially since when it was written the wife's income was treated as her husband's.

[Vito]

My ex had a 5% share in my company and when we split she went for half of the company in the same way that she got half of everything else...she didn't get it and had to settle for the 5%...so personally, I'd keep as much of it as you can to yourself...don't assume that your wife would get half if you split...and certainly don't assume you won't split...

And yes...I am still bitter!!!!

[rootsnall]

My ex had a 5% share in my company and when we split she went for half of the company in the same way that she got half of everything else...she didn't get it and had to settle for the 5%...so personally, I'd keep as much of it as you can to yourself...don't assume that your wife would get half if you split...and certainly don't assume you won't split...

And yes...I am still bitter!!!!

Surely you just had to pay out all the Ltd money in divis once divorce loomed. Infact a good excuse to shut the Co down and use your CGT allowance for a bit of tax dodging. I've got all the family money in the wife's name for tax reasons but she conveniently doesn't know the passwords to any of the bank accounts or her share trading account.

[Vito]

Nope...left all the cash in the company (it was tax exempt as it was from overseas earnings) and my kids bought her 5% off her...it wasn't an easy process but some clever arguements (all of which I don't understand) meant she couldn't get her grubby hands on my business!

Now my kids will get divi's each which goes straight into a trust fund which is frozen until they are 18...