Recieving dividend payments from family then sending it to them as gift, is it legal?

[cojak]

Hi everybody, i am aware there are different articles and posts around this area but i have found mixed responses and most of it to do with husband/wife relationships.

My father has asked if i would let him make me a shareholder of the company to be able to send me a dividend payment of over 5k but less than 10k. And then for me to send it to his personal bank account as a gift.

This raises some red flags for me, he has assured me it is all legal, and whilst frowned upon by the HMRC they cant do anything against it.

i have read mixed things, some saying that i would have to show my involvedment in the company for that % of the dividends, when obviosuly i have no involvement at all.

Also i can imagine how it would look sending the exact figure out the same day to his personal bank account.

In a nut shell i just want to know if this is legal, and if not what the implications might be, i appreciate anyone who answers, i have tried to do research but cant find a definite answer.

Ooh, this one's a doozy! (The situation and the Dad, not the OP.)

Did his accountant suggest this? No wait, let me guess...

[SlipTheJab]

Looks like Dad is trying to avoid the Dividend tax by spreading 5k chunks of Dividend love around the family if thats the case then tell pator he should just pony up the extra to Gideon, as other have said really not worth the grief if you want to sleep at night...

[mclovin]

thanks everyone for your advice, i appreciate it, i was in two minds about whetehr to do it but from what you guys are saying it is not legit, and i dont want to be put in that position. thanks again

[ASB]

As somebody else pointed out, assuming you DIDN'T get caught, you would be liable to tax on your dividends.

[picky]

No, not if it dealt with properly. Since it is caught by the settlements legislation it, theoretically, should not be declared by the OP on their tax return. It should, instead, be declared by the "donor" on theirs and will be assessed to them accordingly.

[/picky]

In practice of course it is more likely to be declared by the recipient, when the enquiry is opened and settled the recipient is likely past the window where they file an amended return. Stuffed then.

[TheCyclingProgrammer]

Would be caught by the settlements legislation s624 fair and square - there is a settlement (the gift of shares from your Dad to you for nothing) and an arrangement has been made up front for the dividends to be sent to your Dad and presumably for you to give the shares back again too, therefore your Dad will retain an interest in the shares he gives you - so its really just a question of whether you'd get caught...but if you do, there is something they can do about it and your Dad will pay tax on the dividends anyway, plus potentially penalties.

As somebody else pointed out, assuming you DIDN'T get caught, you would be liable to tax on your dividends.

[ChimpMaster]

[QUOTE=VectraMan;2219738]Of course it's likely no-one will ever find out, especially if you use brown paper envelopes stuffed with cash.

You realise you may end up paying tax on the money he earns?[/QUOTE]

Simple really isn't it.

Son pays the tax, dad gets all the money.

Sins of the father.

[nato]

What kind of parent puts their children in this position!

As said already this sounds as dodgy as it is. I would kindly decline if I was you.

Sorry for you circumstances.

[VectraMan]

Of course it's likely no-one will ever find out, especially if you use brown paper envelopes stuffed with cash.

You realise you may end up paying tax on the money he earns?

[Alan @ BroomeAffinity]

Cheers dad.

[WTFH]

In a nut shell i just want to know if this is legal.

Probably not

and if not what the implications might be.

A fine, HMRC inspections for the rest of your life and going back historically, jail, dropping soap in the shower, etc.


Some, none or all of the above.

[LondonManc]

Sounds dodgier than a 3 pound note (with or without Mickey Thomas involved).

[SimonMac]

Hi everybody, i am aware there are different articles and posts around this area but i have found mixed responses and most of it to do with husband/wife relationships.

My father has asked if i would let him make me a shareholder of the company to be able to send me a dividend payment of over 5k but less than 10k. And then for me to send it to his personal bank account as a gift.

This raises some red flags for me, he has assured me it is all legal, and whilst frowned upon by the HMRC they cant do anything against it.

i have read mixed things, some saying that i would have to show my involvedment in the company for that % of the dividends, when obviosuly i have no involvement at all.

Also i can imagine how it would look sending the exact figure out the same day to his personal bank account.

In a nut shell i just want to know if this is legal, and if not what the implications might be, i appreciate anyone who answers, i have tried to do research but cant find a definite answer.

If he only reason he is making you a shareholder is to then give him the money then no it is not legit

[NotAllThere]

So your dad wants you to be a shareholder in his company, pay dividends and then you gift the income to him?

Probably tax evasion.

[mclovin]

Hi everybody, i am aware there are different articles and posts around this area but i have found mixed responses and most of it to do with husband/wife relationships.

My father has asked if i would let him make me a shareholder of the company to be able to send me a dividend payment of over 5k but less than 10k. And then for me to send it to his personal bank account as a gift.

This raises some red flags for me, he has assured me it is all legal, and whilst frowned upon by the HMRC they cant do anything against it.

i have read mixed things, some saying that i would have to show my involvedment in the company for that % of the dividends, when obviosuly i have no involvement at all.

Also i can imagine how it would look sending the exact figure out the same day to his personal bank account.

In a nut shell i just want to know if this is legal, and if not what the implications might be, i appreciate anyone who answers, i have tried to do research but cant find a definite answer.