LTD Company reorganization

[ASB]

Excpet of course the whole point of Arctic was that such an arrangement is entirely legal and within the intent of the current tax law. And have you thought of the problem where you "give" 50% of your income to someone else but are taxed as though the whole amount was yours. Where does the money come from to pay the tax bill?

I'm not trying to say it's fair - it isn't. Simply workable - it isn't. I was only responding to the suggestion that it makes it "illegal" for certain people to own shares in the company. It doesn't do that.

Your last point is entirely valid of course. But it does exist in a number of areas. A large gift and dies within 7 years - the estate cop the IHT bill of course.

Current S660 legislation behaves in exactly the way you describe. Oh, and don't forget those gifts to the kids which produce income. The donor is taxed on those (in some circumstances) [Although this is just a subset of S660 anyway].

But yes, it is a crap system.

[aj1977]

Ok...I operate through my own LTD company.Until 13/11/2007 my company had myself as the company director and company secretary and my friend as the other director,with me holding 100% of the shares.
Since 13/11/2007 my friend has resigned from my company directorship and I wanted to appoint my wife as one of the director of my company and sent the relevant forms to companies house but they have still not done it.They say they have not received any forms yet..anyway here are my doubts..


1) Can a company exist with just one person in the capacity of both director and secretary??
2) Can I appoint my wife as another director to my company so that I can start paying her salary and dividends(after allocating her 50% of shares??).My accountant says not to do this as there is an legislation comes into effect from april 2008 which forbids allocating shares to a close family member
3) If option2 is not feasible then is it possible to treat my wife as one of my employee for my company (she is an IT consultant as well, but does'nt work now due to child birth).If yes can I pay her back dated salaries(the NMW) so that I can reduce my company's tax burden?

I wonder whether I could do the following
Since from this month onwards my wife is one of the director in my company I will transfer 50% shares to her .Then I will declare dividends before this year end and I will waiver dividends for me so that the entire dividends goes to her(so that her gross income for the her in this year end touches and stays beneath the £39,825 threshold).This way I can reduce CT for this year.

If there is an income shifting legislation coming post April6th then I will retransfer the 50% from her to myself.

Let me know your thoughts

By the way she does contribute to the business by Proof reading documents, a bit of admin, making phone calls...

[Lewis]

Could you give a bit more detail on how this helps? Do you just pay yourself the same dividends every year irrespective of actual company earnings?

Basically, don't take money out via dividend if it will take you into the higher rate bracket, instead keep it in the company for a year when you don't work much and so can take it out at lower rate instead.

[ASB]

I wonder whether I could do the following
Since from this month onwards my wife is one of the director in my company I will transfer 50% shares to her .Then I will declare dividends before this year end and I will waiver dividends for me so that the entire dividends goes to her(so that her gross income for the her in this year end touches and stays beneath the £39,825 threshold).This way I can reduce CT for this year.

If there is an income shifting legislation coming post April6th then I will retransfer the 50% from her to myself.

Let me know your thoughts

By the way she does contribute to the business by Proof reading documents, a bit of admin, making phone calls...

1) Paying dividends does not reduce CT
2) Does she do 39k worth of work?
2a) Yes. No worries
2b) Possibly caught by S660, but given the current state of Arctic case you may choose to believe you are OK (personally that's my vies, but it ain't my money)

Whether your wife is a director or not is irrelevant from the ownership of shares.

Better solution is to ensure you use all your normal allowance. Calculate your estimate of how much is left over and transfer the requisite number of shares to her. dividend waivers are a red rage to HMCR. Also there are various other attack HMCR could choose to mount based on thier interpretation of S660. Whether they will or not remains to be seen. But there are arguments as to whether the sahres should be gifted, bought or originally subscribed for. Any of these could have an impact.

[Me, I'd just to the above but I've never been overly bothered about what the taxman might think if I believe what I am doing is OK]

[Lewis]

I wonder whether I could do the following
Since from this month onwards my wife is one of the director in my company I will transfer 50% shares to her .Then I will declare dividends before this year end and I will waiver dividends for me so that the entire dividends goes to her(so that her gross income for the her in this year end touches and stays beneath the £39,825 threshold).This way I can reduce CT for this year.

It's not Corporation Tax you'll be saving, it's personal tax but yes in principle you are right to use up her full allowance this year whilst you can. I thought I heard somewhere dividend waivers can be looked upon as dodgy but I think that was before the Arctic Case was resolved so I assume they are ok now. Alternatively give her 100% of the shares, declare £39K and then take the shares back again.

[aj1977]

It's not Corporation Tax you'll be saving, it's personal tax but yes in principle you are right to use up her full allowance this year whilst you can. I thought I heard somewhere dividend waivers can be looked upon as dodgy but I think that was before the Arctic Case was resolved so I assume they are ok now. Alternatively give her 100% of the shares, declare £39K and then take the shares back again.

Yes I am thinking along those lines as well..Cheers ...any other inputs guys...i have mailed my accountants as well...lets c what they think of it...