using umbrella co, do i need to check contract in IR35?

[malvolio]

How about Hector simply deciding it was an artificial construction with no business justification other than saving tax, in which case he would simply ignore it, treat all income as personal and tax it accordingly?

[timh]

I would have thought that only owning 5% meant that I would only get 5% dividends, the other 95% going to the majority shareholder, who just by coincidence could be my wife

If that's so, how did the MSC's work it out so (if I understand correctly) numerous contractors each had x% of a ltd co yet got paid dividends based on how much they brought into the company, not its overall profits?

[Bluebird]

If that's so, how did the MSC's work it out so (if I understand correctly) numerous contractors each had x% of a ltd co yet got paid dividends based on how much they brought into the company, not its overall profits?

good point, but he doesn't really want to be an MSC does he....

[Moscow Mule]

If that's so, how did the MSC's work it out so (if I understand correctly) numerous contractors each had x% of a ltd co yet got paid dividends based on how much they brought into the company, not its overall profits?

Different classes of shares.

[tim123]

then you're into the realms of reasonable share distribution, I guess you could quite ligitimatley sell your shares to your wife...

But then that could take her over the 37k personal threshold - all too complicated for me to think about.

I'm sure there's an easy answer why you can't do this...

It's because she is a 'connected' person as defined in the IR35 legislation.

If you gave the shares to an unconnected person it would work.

tim

[oraclesmith]

Hey, if you pass your majority shareholding to me, it will help you save tax...

[ASB]

so if i owned less than 5% of my own LTD co then i would be IR35 safe?

Yes.

The legislation requires a material interest, wihch is usually ownership of more the 5% of the share capital - but this also include control of more than 5%, right to receive more than 5% of the divis, right to receive more than 5% of the assets. Also the 5% includes associates.

[fzbucks]

Hey, if you pass your majority shareholding to me, it will help you save tax...

swap 50% of each company's shares with each other