SVP for BTL wife as director

[zafoeta]

Hi

I am thinking to create a new svp company for BTL purpose.
Funding would be coming from my trading company which I am a sole director of.
I am thinking to have my wife as director of the new svp, could this be seen as some sort of tax dodging given my wife is not director of my trading Ltd?

Thanks

[Eirikur]

Hi

I am thinking to create a new svp company for BTL purpose.
Funding would be coming from my trading company which I am a sole director of.
I am thinking to have my wife as director of the new svp, could this be seen as some sort of tax dodging given my wife is not director of my trading Ltd?

Thanks

Depends, is it tax you're trying to dodge?

[Lockhouse]

Do you mean SPV?

[northernladuk]

Why do want to make her a director?

[michaelC]

shareholder

if you are looking to draw dividends to use your spouse tax allowance then she should be made a shareholder not only director. Because directors are only able to receive salary and thats not tax efficient due to company NI among other things.

Funding would come from trading company? It can't simply be a gift from one company to the other. Theres need to be a valid business reason behind this.

It could be shown as a inter company loan and the SPV company should also charge interest to the trading company as well. And repay the loan in the future back to the trading company

[TheGreenBastard]

if you are looking to draw dividends to use your spouse tax allowance then she should be made a shareholder not only director. Because directors are only able to receive salary and thats not tax efficient due to company NI among other things.

Funding would come from trading company? It can't simply be a gift from one company to the other. Theres need to be a valid business reason behind this.

It could be shown as a inter company loan and the SPV company should also charge interest to the trading company as well. And repay the loan in the future back to the trading company

Could you also have bi-directional shares between the Ltds? Put them in a different class to your own; dividends are not taxed between UK Ltds afaik.

[michaelC]

Could you also have bi-directional shares between the Ltds? Put them in a different class to your own; dividends are not taxed between UK Ltds afaik.

So the SPV company would become shareholder of the trading company under a different share class so that the trading company can pass the funds as dividends..

I think this could work but im not sure if hmrc sees something wrong with it, as the shares are gifted to the SPV for nothing in return? Especially if the two companies have different shareholders/directors?

[TheGreenBastard]

So the SPV company would become shareholder of the trading company under a different share class so that the trading company can pass the funds as dividends..

I think this could work but im not sure if hmrc sees something wrong with it, as the shares are gifted to the SPV for nothing in return? Especially if the two companies have different shareholders/directors?

I can't see there anything wrong with creating a SPV with this bi-directional dividend setup if the directorship is like-for-like; as you say that's the sticking point if you have two different directors.

Ultimately financial institutes won't lend to you contracting Ltd due to SIC codes and the fact they require the SPV to be wholly for the purpose of real estate investment and renting so it wouldn't be dubious to HMRC.

[northernladuk]

Could you also have bi-directional shares between the Ltds? Put them in a different class to your own; dividends are not taxed between UK Ltds afaik.

He can't use his wife to dodge tax in that setup.

[fullyautomatix]

We need a new sub forum for innovative tax dodging ideas