Dividends to other shareholder in same company but working in different industry

[richy]

Hi all,

My relative has the option of a lucrative contract. I would like to run it though my Ltd, this structure would work well if I could do dividends to the relative for a different amount than my dividends. is that possible? Is it allowed if the contract is outside IR35 etc?

The other issue is that it's different industry (health), compared to my main (IT). Any tips appreciated!
Cheers, richy

[Ardesco]

Don't do it.

Dividends have to be paid out to all share holders depending on their share holding. So if you have 80% of shares and relative has 20% the money paid in dividend is split 80-20 between shareholders. You can't pay them the amount of money they have earnt in dividend and then pay yourself the amount of money you have earnt in dividend, it doesn't work like that.

Second mixing business and family is a sure fire way to break the family up (same with friends). Tell them to set up their own LTD Co.

[frank size]

another thought - as he is in health industry, his billing may be VAT exempt therefore a partial exemption calc will need to be done and perhaps you lose some of your VAT reclaim.

[Gonzo]

Don't do it.

Dividends have to be paid out to all share holders depending on their share holding. So if you have 80% of shares and relative has 20% the money paid in dividend is split 80-20 between shareholders. You can't pay them the amount of money they have earnt in dividend and then pay yourself the amount of money you have earnt in dividend, it doesn't work like that.

Second mixing business and family is a sure fire way to break the family up (same with friends). Tell them to set up their own LTD Co.

WHS.

Don't do it. There are ways that different levels of dividends could be acheived with different classes of shares, but this will make your accountancy a whole lot more complicated (and expensive).

I cannot think of a single reason why it is not better to run two separate companies for this scenario.

[NotAllThere]

Run it through your company, but with him as an employee. I.e. you act as his brolly, and skim off a percentage of his invoices.

[ASB]

Hi all,

My relative has the option of a lucrative contract. I would like to run it though my Ltd, this structure would work well if I could do dividends to the relative for a different amount than my dividends. is that possible? Is it allowed if the contract is outside IR35 etc?

The other issue is that it's different industry (health), compared to my main (IT). Any tips appreciated!
Cheers, richy

Yes you can do it. You can declare whatever you like, though this is per share, you will potentially need a waiver from all the other shareholders to equalise things. There is a school of thought that this a bit like wandering into the tax office with a target on your back, but you can do it.