Permissions required for revoking Ltd Co. shares

[mouseorgan]

4 pages in and no one has neg repped the OP. Everyone feeling sorry for his situation or something?

I can assure you I am feeling utterly utterly dreadful about this situation that I didn't really seem to have appreciated properly. I'm pretty naive about this sort of thing.

[northernladuk]

I'm pretty naive about this sort of thing.

Which bit. Running a business properly or divorce?

[mouseorgan]

Which bit. Running a business properly or divorce?

yes :-s

[TheCyclingProgrammer]

Isn't S660A an irrelevance here?

While you are married, then there is nothing that HMRC can do to stop you splitting the share income between husband and wife (see Arctic).

When you are not married, and have divorced, why would HMRC think that you are doing the splitting as an artificial way of avoiding tax, and then taxing you accordingly as if all the income was yours? You're not in a relationship any more, so can hardly be getting some benefit from the arrangement - on the contrary, in fact.

(oh no, he's about to start another settlements legislation discussion...)

After copious amounts of reading on the subject, my understanding of the settlements legislation is that the settlement is created at the point at which you transfer the shares.

In other words, if you gift shares to your wife, the bounteous nature of the gift could make the transfer a settlement; it's only the specific exemption for genuine gifts between spouses (that aren't just a right to income) that makes it not a settlement (regardless of whether or not the settlor retains an interest). If you aren't married, then it may be considered a settlement so you need to show you do not retain an interest (unless you could successfully argue that there was no bounteous arrangement in the first place).

We all know about the above - surely this is only relevant when the transfer happens?

The law doesn't seem very clear on what happens should you divorce; like you I'm not sure the legislation applies anymore but who knows eh? If it only matters what the circumstances are at the point of transfer, then the OP is clearly exempt. If the application of the legislation can change as the result of a change in circumstances, then like you say, the OP would need to show they do not retain an interest in the shares and it seems reasonable that they would not.

If changes of circumstances do affect things, then presumably that means in a case where there is a transfer of shares between non-married partners, prior to being married you would need to show no retained interest but if those partners then married, they would automatically be exempt.

We could discuss the ins and outs of settlements legislation on here all day but I think unless you're quite obviously caught by it (e.g. gifting shares with strings attached, using dividend waivers or any of the other red flags that HMRC point out under TSEM4000) HMRC are unlikely to challenge you.

[john@UKCA]

How can you give her a percentage less than she was due in way you can't explain? Surely she gets exactly what her share capital dictates by agreed and minuted shareholder meetings with associated dividend vouchers? Any other way is exposing you to huge risk isn't it?

It would have only been friendly if it didn't look like you were trying to defraud her. If you have cut corners or made a mess here I would have thought the only way out of this one is to play it by the book and fix it properly?

I think this is going to be incredibly painful.......

I agree with this advice - transfering the trade and assets out of one company to a newly formed company so as to divert dividends to yourself is asking for trouble!

[mouseorgan]

(oh no, he's about to start another settlements legislation discussion...)

After copious amounts of reading on the subject, my understanding of the settlements legislation is that the settlement is created at the point at which you transfer the shares.

In other words, if you gift shares to your wife, the bounteous nature of the gift could make the transfer a settlement; it's only the specific exemption for genuine gifts between spouses (that aren't just a right to income) that makes it not a settlement (regardless of whether or not the settlor retains an interest). If you aren't married, then it may be considered a settlement so you need to show you do not retain an interest (unless you could successfully argue that there was no bounteous arrangement in the first place).

We all know about the above - surely this is only relevant when the transfer happens?

The law doesn't seem very clear on what happens should you divorce; like you I'm not sure the legislation applies anymore but who knows eh? If it only matters what the circumstances are at the point of transfer, then the OP is clearly exempt. If the application of the legislation can change as the result of a change in circumstances, then like you say, the OP would need to show they do not retain an interest in the shares and it seems reasonable that they would not.

If changes of circumstances do affect things, then presumably that means in a case where there is a transfer of shares between non-married partners, prior to being married you would need to show no retained interest but if those partners then married, they would automatically be exempt.

We could discuss the ins and outs of settlements legislation on here all day but I think unless you're quite obviously caught by it (e.g. gifting shares with strings attached, using dividend waivers or any of the other red flags that HMRC point out under TSEM4000) HMRC are unlikely to challenge you.

I must admit I really don't understand much of this at all. By interest in the gifted shares, I take it this means that I'm not benefiting from her being able to receive the income. I can show that I presume. I am still married, and am totally unclear about the talk about it being a settlement. I would certainly not want to be seen to legally be giving her the right to an income as part of a divorce settlement. But then that way lies winding up the company to bring an end to that income stream.

You talk about them challenging me... what would this challenge be for? Thanks

[TheCyclingProgrammer]

I must admit I really don't understand much of this at all. By interest in the gifted shares, I take it this means that I'm not benefiting from her being able to receive the income. I can show that I presume. I am still married, and am totally unclear about the talk about it being a settlement. I would certainly not want to be seen to legally be giving her the right to an income as part of a divorce settlement. But then that way lies winding up the company to bring an end to that income stream.

You talk about them challenging me... what would this challenge be for? Thanks

It took me a while to fully get my head around it and that was after a lot of reading on the subject, from HMRC guidelines, to case law, to the text of the actual law. You might what to get an accountant or specialist tax adviser to explain it to you.

That said, case law has already established that as long as the shares your wife holds are ordinary shares, they aren't just a right to income. It's not something I'd be worrying about in your position.

[mouseorgan]

So, It seems to be that I need to pay her the differences between what I have given her and the value of the shares. In the context of a Divorce, which obviously is not the CUK focus) Should I just go do this today? It seems right to NOT take it into context of anything else at all, but don't want to screw myself in a bigger picture.

[TheCyclingProgrammer]

So, It seems to be that I need to pay her the differences between what I have given her and the value of the shares. In the context of a Divorce, which obviously is not the CUK focus) Should I just go do this today? It seems right to NOT take it into context of anything else at all, but don't want to screw myself in a bigger picture.

I don't think you are going to get better advice on here than you will from your accountant and/or solicitor. You really need to speak to them.

[mouseorgan]

That said, case law has already established that as long as the shares your wife holds are ordinary shares, they aren't just a right to income. It's not something I'd be worrying about in your position.

Sorry, by not worrying about it, does this mean what your discussing just isn't applicable to me? Thanks