What's wrong with this structure?

[Wanderer]

I know, but is this structure legal?

Difficult question. If A and B were married then it would be OK. Otherwise, you have to carefully consider the implications of "income shifting" and "Settlements". You probably need to get professional advice. Even then, some accountants are risk averse and will advise you not to do this.

My take is that you would need to take legal advice and get a proper structure to the company with employment contracts etc on top of the accountancy advice.

As others have said, it's really messy and has the potential to go spectactularly wrong should A and B break up, stop working, get pregnant or HMRC decide to investigate and find something they don't like the smell of...