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But the Chancellor (Geofery Howe) standing up in HoC and stating categorically that the introduction of separate taxation for man and wife will result in "people re-arranging their affairs to take advantage adn this is entirely expected and approriate" is a pretty fair indication that right is with the Jones, not with Gay Gordon. You can't lightly disregard clear statements of intent.
There are some spousal transfers that are explicitely allowed for in legisilation to which this comment could be said to refer. IMHO you cannot extroplate this up to all the possibilites and then infer that the comment referred to them as well.
Suppose you and your spouse created the company in the first place with equal shares? There's no element of gift at all then, is there? Does S660 still apply?
It's all so confusing, I think I'll just pay up for a quiet life.
Suppose you and your spouse created the company in the first place with equal shares? There's no element of gift at all then, is there? Does S660 still apply?
It's all so confusing, I think I'll just pay up for a quiet life.
Yeah - I've still got no idea whether what I'm doing is OK, even if Arctic win.
What is at issue is surely whether the gift was a right to income (or that there is no gift involved).
Well it was fairly obvious to the CoA which actually ruled on this point. It should be fairly obvious to anyone who has invested in stocks.
The one thing and ordinary share does not grant is a right to income. The company may decide for reasons of it's own not to grant a dividend and so no money would be due.
This is different to another S660 case involving the Actor Sir John Mills and his daughter Hayley. In this instance it was a trust which Sir John's acting income was paid and which did guarantee Hayley an income.
Had a company been set up with a class of shares which did guarantee an income then there would be no question.
Indeed look into the case and a dividend was not paid for those periods when it was thought the company was covered by IR35.
There are some spousal transfers that are explicitely allowed for in legisilation to which this comment could be said to refer. IMHO you cannot extroplate this up to all the possibilites and then infer that the comment referred to them as well.
tim
I think it was Norman Lamount who was asked specifically about a spouse getting dividends in the other partner's company, so it is relevent.
The one thing and ordinary share does not grant is a right to income. The company may decide for reasons of it's own not to grant a dividend and so no money would be due.
Actually it does. It grants a right to income based on the dividend pool for that class of share unless waived. Clearly it is not wholly a right to income. If nothing else it give the right to certain capital on wind up for example. That leaves is it substantially a right to income. My belief (like yours) is not. I believe HMRC did argue at one point "substantially a right to income". But is this relevant.?
My understanding is that Mrs Jones bought the shares, as such this exemption - and the rights of the shares are surely irrelevant. The central question is surely whether there was any element of gift in the price paid? If there was then it is caught (the derived property is surely clearly to the benefit of at least Mrs Jones - and therefore comes under para 2).
However, I personally don't think there is necessarily any element of gift. If Mrs Jones paid par for her shares at formation time, there was no guarantee of sucess, she put in certain effort into the management and administration then I don't see any gift. You can't turn the clock back and say "because it so happened to have been successful that was obviously a gift" - though this seems to be HMRC main argument.
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