Income Shifting

[TheCyclingProgrammer]

To be honest I am utterly confused now Need to re-read the thread and take concentrate a bit more. Serves me right trying to post on a busy day. Hopefully Mal will come back and put me right where he needs to. I fail.

Sorry, I probably should have started a new thread. The OP was discussing whether or not he needed to be married to his partner in order to give her shares and pay her dividends without being caught by s660/s624 though. He, like me, seemed confused by the various mixed messages being given out.

[TheCyclingProgrammer]

Company valuation for unquoted shares is far more complicated than that!

If you were to invest £1 in a company - how much would you expect to receive in dividends in a year?

If somebody who you were completely unrelated to (a complete third party) invested £1 in your company would you want to give them 25% of your income?

Craig

I'm just following my accountants advice here. I'm not sure it's really relevant to the s624 discussion though; even if I'd just given those shares to her - no strings attached - I'm not sure how settlements legislation would apply.

[Craig at Nixon Williams]

I'm just following my accountants advice here. I'm not sure it's really relevant to the s624 discussion though; even if I'd just given those shares to her - no strings attached - I'm not sure how settlements legislation would apply.

You might want to check your accountants advice...if they stick by that then I'll send you a cheque for £1 and await my dividends!

[TheCyclingProgrammer]

You might want to check your accountants advice...if they stick by that then I'll send you a cheque for £1 and await my dividends!

I have checked. The shares were my property. I can choose to sell them for whatever value to whomever I want, surely? He also didn't think there would be an issue if I gave her the shares for nothing.

I have to ask again though; regardless of whether I gave her the shares, sold them for a £1 each or some other value, how does that cause any income derived from those shares to fall under settlements legislation, if I have no retained interest in them?

[Clare@InTouch]

On a more pragmatic level, who have HMRC actually investigated with regards to income shifting and/or settlements legislation in recent years, and won? Is this actually all worrying over nothing?

Practical Law

[The Spartan]

I have checked. The shares were my property. I can choose to sell them for whatever value to whomever I want, surely? He also didn't think there would be an issue if I gave her the shares for nothing.

I have to ask again though; regardless of whether I gave her the shares, sold them for a £1 each or some other value, how does that cause any income derived from those shares to fall under settlements legislation, if I have no retained interest in them?

I suggest you change accountants, otherwise you'll be in for a hiding to nowhere before long

[TheCyclingProgrammer]

I suggest you change accountants, otherwise you'll be in for a hiding to nowhere before long

Given that you've given no reason as to why I should be changing accountants, that's not really a helpful suggestion, but thanks.

I've had no reason to doubt my accountant before now and to be honest, I've still not seen any definitive reason from anybody as to why my situation leaves me on shaky ground.

That said, a concerned email has been sent to my accountant and I await his response on two points 1) whether or not settlements legislation is applicable (I'm still not sure it does) and 2) the consideration for the original transfer of shares.

[TheCyclingProgrammer]

Practical Law

Is that it?

Not really relevant to the issue of shares between non-spouses though.

[Craig at Nixon Williams]

I have checked. The shares were my property. I can choose to sell them for whatever value to whomever I want, surely? He also didn't think there would be an issue if I gave her the shares for nothing.

I have to ask again though; regardless of whether I gave her the shares, sold them for a £1 each or some other value, how does that cause any income derived from those shares to fall under settlements legislation, if I have no retained interest in them?

If what you are saying is correct (that she wouldn't be giving you anything back and that there is absolutely no condition attached) then perhaps there is no retained interest. You would still be caught by the legislation because of the fact that you are unmarried and that the share transfer would be bounteous.

Craig

[AtW]

I have checked. The shares were my property. I can choose to sell them for whatever value to whomever I want, surely?

That can be deemed as trying to dodge inheritance tax because you'd be reducing your "estate".