Reply to: Adding a foreign shareholder

[NotAllThere]

But don't forget the previous person asking the almost same question revealed on page 8 that the money would end up in a joint bank account which the OP also had access to.

There is a reason we are cynical on here as it's usually right in the end (see my post above as well).

Good point, well presented.

Can we close or move to general now?

I'll close it. The OP has the answers.

If you do this and you have access to the money or indirectly benefit from it (e.g. the "friend" buys drugs with the money, sells, and the profits are laundered back to you), or you're funding a criminal or terrorist organisation, it's a criminal offence.

If you are just a nice person wishing to give a portion of money to someone you know who needs it, then it's allowed, but they'll be taxed on the value of the shares gifted, and on the dividends.

Thread closed.

[Lance]

Thanks for your advice! Oh I wasn't complaining about the tone of responses, I am enjoying them! Yeah what I'm doing is tax evasion, it just seems wrong to me that after the first 15k and with corporation tax included, its 79% cut from what I give! I think it's not unreasonable to avoid that and just pay the corporation and tax and my friend to pay tax on the dividend in France inline with the amount received, like a normal person. I'd understand if we were millionaires trying to avoid tax but all I want is to be taxed at the rate any normal person would be.

A few people think I'm being vague, which I don't understand, I want to give money to my friend. Perhaps people are confusing vagueness with an answer that is not believable to them? Which I totally understand!

Anyway thank for your advice, I guess I should've just started the company jointly, but oh well!

oh dear oh dear.


You can't just add 19% CT and 60% gift tax and get 79% total tax cut. That's just really dumb....

Back of the fag packet figures.
Assume 1:1 GBP:EUR

£40k income based on your early post.
- £9k salary
- £1k accountant
is £30k profit. That is taxed at c. £6k
take £24k as dividends and pay 7.5% tax on £22k of it is c. £2k

So you've paid £8k tax in UK now. And have £32k in your pocket.
Gift half (£16k) of that to your Al-Qaeda money-mule in France. They have £14k tax free (or whatever it is, there's too many pages to read back), and have 60% to pay on £2k of it (c. £1k)

Net result = £9k tax on £40k = 22.5% tax.
So tell me again what's unfair about that?

Can we close or move to general now?

[eek]

It's only tax evasion if you benefit from it. What you are wanting to do on the face of it is give money to a friend and minimise the amount that goes to the tax authorities. That's called tax planning and is perfectly lawful and reasonable.

But don't forget the previous person asking the almost same question revealed on page 8 that the money would end up in a joint bank account which the OP also had access to.

There is a reason we are cynical on here as it's usually right in the end (see my post above as well).

[eek]

Thanks for your advice! Oh I wasn't complaining about the tone of responses, I am enjoying them! Yeah what I'm doing is tax evasion, it just seems wrong to me that after the first 15k and with corporation tax included, its 79% cut from what I give! I think it's not unreasonable to avoid that and just pay the corporation and tax and my friend to pay tax on the dividend in France inline with the amount received, like a normal person. I'd understand if we were millionaires trying to avoid tax but all I want is to be taxed at the rate any normal person would be.

A few people think I'm being vague, which I don't understand, I want to give money to my friend. Perhaps people are confusing vagueness with an answer that is not believable to them? Which I totally understand!

Anyway thank for your advice, I guess I should've just started the company jointly, but oh well!

Large sums of money and "Friends" rarely go together.

[NotAllThere]

Thanks for your advice! Oh I wasn't complaining about the tone of responses, I am enjoying them! Yeah what I'm doing is tax evasion

It's only tax evasion if you benefit from it. What you are wanting to do on the face of it is give money to a friend and minimise the amount that goes to the tax authorities. That's called tax planning and is perfectly lawful and reasonable.

[kazh]

Mate, the tone of responses to this thread results from the fact that what you are doing looks like tax avoidance, and you've been vague enough about why you are doing it and what you gain by it that it makes everyone suspicious, me included.

But I'll put all that aside, because if you are trying to accomplish something illegal you'll get caught. So some thoughts.

If you have a new company that has no income and no assets, it's worth nothing, so the shares are worth nothing and you can give them away without worrying about it. If you hope to sign a contract but haven't yet, then you have no income, and the shares are worthless.

If you have assets but no income yet (no contracts), the company is worth the value of the assets.

You can certainly start up a new company that has no assets in partnership with your friend and give him 49% of the shares. If you don't have a contract yet and are hoping to get one, this is an obviously easy way to do it. "My friend and I started a company, he has 49%, I have 51%." This happens all the time.

If you already have a contract then you do have income and then it becomes more complex. But if this is really a startup and there's no guaranteed income yet, then you can pretty much do what you want.

Your friend in France will have to report any dividends received and pay tax on them.

Thanks for your advice! Oh I wasn't complaining about the tone of responses, I am enjoying them! Yeah what I'm doing is tax evasion, it just seems wrong to me that after the first 15k and with corporation tax included, its 79% cut from what I give! I think it's not unreasonable to avoid that and just pay the corporation and tax and my friend to pay tax on the dividend in France inline with the amount received, like a normal person. I'd understand if we were millionaires trying to avoid tax but all I want is to be taxed at the rate any normal person would be.

A few people think I'm being vague, which I don't understand, I want to give money to my friend. Perhaps people are confusing vagueness with an answer that is not believable to them? Which I totally understand!

Anyway thank for your advice, I guess I should've just started the company jointly, but oh well!

[northernladuk]

The 51 49 split wasn't meant to address tax evasion. It was to ensure control was retained.

I get that but in the past people like Simon Dolan for one stated he preferred the earner gets the larger chunk even if its 51% to reflect being the main earner and not for control reasons. Obviously there was plenty of heated discussion around it and many others thought it made no difference. I like the idea of it being unequal in the favour of the person that's actually doing anything. Just my preference and the opinion, rightly or wrongly, of some accountants.

[fidot]

Market value is a question though. The sahres are going to bring in 10's of thousands of K in the next three years so market value is going to be far more than he/she is willing to pay and defeat the whole point of the exercise. No one in contracting ever pays market value so don't think this is going to work at all.

And even 51/49 as a majority shareholder doesn't mean it isn't tax evasion.

The 51 49 split wasn't meant to address tax evasion. It was to ensure control was retained.

[eek]

Mate, the tone of responses to this thread results from the fact that what you are doing looks like tax avoidance, and you've been vague enough about why you are doing it and what you gain by it that it makes everyone suspicious, me included.

But I'll put all that aside, because if you are trying to accomplish something illegal you'll get caught. So some thoughts.

If you have a new company that has no income and no assets, it's worth nothing, so the shares are worth nothing and you can give them away without worrying about it. If you hope to sign a contract but haven't yet, then you have no income, and the shares are worthless.

If you have assets but no income yet (no contracts), the company is worth the value of the assets.

You can certainly start up a new company that has no assets in partnership with your friend and give him 49% of the shares. If you don't have a contract yet and are hoping to get one, this is an obviously easy way to do it. "My friend and I started a company, he has 49%, I have 51%." This happens all the time.

If you already have a contract then you do have income and then it becomes more complex. But if this is really a startup and there's no guaranteed income yet, then you can pretty much do what you want.

Your friend in France will have to report any dividends received and pay tax on them.

And corporation tax also has to be paid on the profits before the dividends are issued (yes, it should be obvious but I've seen people assume that because the money was being sent abroad the tax didn't need to be paid - and it does).

[WordIsBond]

Mate, the tone of responses to this thread results from the fact that what you are doing looks like tax avoidance, and you've been vague enough about why you are doing it and what you gain by it that it makes everyone suspicious, me included.

But I'll put all that aside, because if you are trying to accomplish something illegal you'll get caught. So some thoughts.

If you have a new company that has no income and no assets, it's worth nothing, so the shares are worth nothing and you can give them away without worrying about it. If you hope to sign a contract but haven't yet, then you have no income, and the shares are worthless.

If you have assets but no income yet (no contracts), the company is worth the value of the assets.

You can certainly start up a new company that has no assets in partnership with your friend and give him 49% of the shares. If you don't have a contract yet and are hoping to get one, this is an obviously easy way to do it. "My friend and I started a company, he has 49%, I have 51%." This happens all the time.

If you already have a contract then you do have income and then it becomes more complex. But if this is really a startup and there's no guaranteed income yet, then you can pretty much do what you want.

Your friend in France will have to report any dividends received and pay tax on them.

[kazh]

Sorry to everyone that thinks this whole thing is total crap!

At least you can enjoy all the various interesting/knowledgeable/sarcastic characters on here! Some of the comments were so funny and dry! and super knowledgeable at the same time! so I really appreciate it

Anyway, so I contacted mercer & hole for a proper valuation, I've made less than £100 so far in the last few months, it's a new company, so interesting to see what they say! I was projecting 30-50k and if they think the same then I guess buying the shares for my friend will not be cheap and I'll have to abandon the whole endeavour.

Thanks again for all the advice, I reread many times!

[northernladuk]

Having read the 10 pages, OP can technically give away half of his company to an outsider. It is his share that he is giving away. I do'nt think HMRC would ask questions regarding that.
Lot of companies get outsiders on board and give up shares in the company. I do not think anybody really asks for justifications.
Once, the extra shareholder is added to the company, obviously the dividend that the company declares should include that shareholder.

This is a perfectly clear question and something that is done as a very common activity. The only reason there are questions raised is that this is rare with one man LTD companies. The tax avoidance/evasion angle is a red herring. That chap in France will declare his earning in his tax returns and deal with it as is needed.

I guess seems the whole thread is crap then I guess this rubbish will fit in nicely.

[fullyautomatix]

Having read the 10 pages, OP can technically give away half of his company to an outsider. It is his share that he is giving away. I do'nt think HMRC would ask questions regarding that.
Lot of companies get outsiders on board and give up shares in the company. I do not think anybody really asks for justifications.
Once, the extra shareholder is added to the company, obviously the dividend that the company declares should include that shareholder.

This is a perfectly clear question and something that is done as a very common activity. The only reason there are questions raised is that this is rare with one man LTD companies. The tax avoidance/evasion angle is a red herring. That chap in France will declare his earning in his tax returns and deal with it as is needed.

[eek]

I still can't quite believe that we're tolerating this nonsense.

I can - there isn't that many posts to comment on and it's suitably plausible yet stupid that we aren't dismissing it out of hand.

[wattaj]

I still can't quite believe that we're tolerating this nonsense.