First Contract - Various Questions

[blacjac]

I've been advised the same as DaveB

I can't remember the case in question, but I was told that in one income splitting investigation a few years ago, HMRC used this argument. Paying it into an account that only she has access to prevents this.

[SueEllen]

I've been advised the same as DaveB

I can't remember the case in question, but I was told that in one income splitting investigation a few years ago, HMRC used this argument. Paying it into an account that only she has access to prevents this.

This is completely artificial as if the personal account your wife has is with the same bank as the joint account, there is nothing stopping her moving the money over to the joint account as soon as she receives the dividends.

All this money moving from business account to wife's personal bank account to joint account could take about 6 hours with internet banking.

[bold]

This is completely artificial as if the personal account your wife has is with the same bank as the joint account, there is nothing stopping her moving the money over to the joint account as soon as she receives the dividends.

All this money moving from business account to wife's personal bank account to joint account could take about 6 hours with internet banking.

This will be the case for me, we have joint and her own with same bank, moving between accounts is instant, I will pay into her own account I guess, Once shoes, handbags Facials and other treatments are deducted the rest will be transfered into joint WIFE TAX !!

[DaveB]

This is completely artificial as if the personal account your wife has is with the same bank as the joint account, there is nothing stopping her moving the money over to the joint account as soon as she receives the dividends.

All this money moving from business account to wife's personal bank account to joint account could take about 6 hours with internet banking.

In which case Hector would see it the same way. It is not your money, it is hers as a shareholder in your Ltd Co. If she then transfers divi payments to you then it could be seen as tax evasion.

[northernladuk]

In which case Hector would see it the same way. It is not your money, it is hers as a shareholder in your Ltd Co. If she then transfers divi payments to you then it could be seen as tax evasion.

Or blatently pays things in the OP's name like the post we had a while ago. The guy divis the money to his live in girlfriend who then paid his rent, car insurance etc for things in his name not hers. Not as black and white as moving money but still waves a big red flag.

[SueEllen]

In which case Hector would see it the same way. It is not your money, it is hers as a shareholder in your Ltd Co. If she then transfers divi payments to you then it could be seen as tax evasion.

So if either of you move dividend money (all or some of it) , which was originally paid into your personal bank accounts, to the joint account which is used to pay joint household bills then it's tax evasion?

[DaveB]

So if either of you move dividend money (all or some of it) , which was originally paid into your personal bank accounts, to the joint account which is used to pay joint household bills then it's tax evasion?

The advice I was given was that it could be seen that way should Hector ever decide to carry out an investigation. It's not as clear as if your other half transferred the money directly to you but it could still be an issue.

[bold]

The advice I was given was that it could be seen that way should Hector ever decide to carry out an investigation. It's not as clear as if your other half transferred the money directly to you but it could still be an issue.

So having my wife as shareholder is not a good idea ? I'm new to all this so done this on the advice of several accountants ?

[Fred Bloggs]

So having my wife as shareholder is not a good idea ? I'm new to all this so done this on the advice of several accountants ?

HMRC would love to challenge you very much for having the wife as a share holder, but after Acrtic Systems it is very doubtful IMO that they can, not without a change in the law.

[DaveB]

So having my wife as shareholder is not a good idea ? I'm new to all this so done this on the advice of several accountants ?

Wife as a shareholder is fine. Arctic Systems made that clear. The issue is ensuring that any money paid to the wife in Dividends cannot be reasonably said to have been transferred back into your possession afterwards.

Without arguing the small print back and forth. Basically make sure that any money paid you your wife or partner in divi's is paid to her own account and not used to pay for things in your name.

Just to be clear. I am not an accountant and I am simply relaying advice I was given in the past that made sense to me at the time.