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Previously on "Gift my shares to spouse whose not working take out dividend each year"

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  • pkm
    replied
    Originally posted by Lance View Post

    why do that when she can be made a full director?
    She can be. But I'm not sure how HMRC will view OP's case. He's gifting his entire company to his wife and making her a director. She's has not contributed or will ever contribute in future to the company. It is for the sole purpose of drawing all the money from company account. He will be in trouble if that money ever makes it back to him via her and HMRC finds out. If they ever separate, he's not going to get a single penny back from his business.

    I think OP should retain the title of director and making his wife the company secretary retaining control with 50-50 shareholding or as appropriate. It seems much safer to me. But then I do not know OP's circumstances fully well. I agree his tax bill would be higher.

    Safest is to MVL the company, pay the 10% entrepreneur tax relief and be done with it.

    Leave a comment:


  • northernladuk
    replied
    Before NorthernLad jumps in and says "ask you accountant?" - I don't have one currently, I think quite a few people would be in this position so might help a few people.
    I'm still gonna jump in and say it. You are deciding not to ask a tax specialist and instead are asking a bunch of contractors. They might be able to help but it will be anecdotal evidence based on something they've done with the advice of an accountant so still aren't experts. These people could also have different circumstances.

    Oddly I think your circumstances are indeed a little different so the standard 'Look at Arctic' isn't the safest advice IMO but I'll come to that. But either way, not asking an accountant and relying on a bunch of contractors isn't a great way to do stuff, so as much as people don't like it, get an accountant and ask them.

    You can gift shares. I would probably go ahead and make her the company secretary as well. She could draw a salary and do basic admin work. This would help in the case if director passes away. Shareholder can appoint themselves as director - check articles of association. It is a pain if director passes away and there are no company reps.
    And this proves my point made above. You can but it's got to be done properly and there is no need for a company secretary anymore so just go full director. Doing basic admin work is a joke. No one ever does it so it's a complete sham.

    Originally posted by gazelle View Post
    Thanks [USER="45"]
    The cash reserve in the company has already had corp tax paid on it, so what is left should be able to distribute as dividends over the next few years even though no revenue coming through?

    Just think it's a better alternative to doing MVL, at least the company is still there should I get an outside role in the near future and also money is being extracted from the company in a tax efficient manner.
    So my problem here, and I don't know the answer so just putting it out there, is that the situation the OP is on is not totally the same as Arctic and I think some caution is needed here. Happy to be told otherwise.


    In the Arctic case it was an ongoing company with the shares already set up. The argument was the wife supports a busy director so is indirectly assisting the company and so on. The OP's situation is a pure tax avoidance model. He wants to give the wife shares for no reason than to extract funds at a preferrable tax rate. No business reason or justification. Does that not fall in to aggressive tax avoidance? HMRC lost Arctic and are still grumbling but if Arctic were doing what the OP is doing I'm 100% sure Arctic would have lost. There is no business reason, just aggressive tax avoidance.

    I would be very wary of any advice that just says 'Arctic systems says you can do it' as it's not the same.

    Leave a comment:


  • edison
    replied
    Something to check in your client contracts is any termination clause for not being a majority shareholder. My current one has this termination clause "the Individual does not own at least 50% of the issued voting share capital (from time to time) of the Consultant Company."

    Leave a comment:


  • Lance
    replied
    Originally posted by pkm View Post

    You can gift shares. I would probably go ahead and make her the company secretary as well.
    why do that when she can be made a full director?

    Leave a comment:


  • pkm
    replied
    Originally posted by gazelle View Post
    Hi folks,

    I suspect many of us have ltd companies that are sitting idle whilst we are on inside IR35 roles and contemplating whether to keep company going in case of future outside IR35 roles or shut company down via MVL.

    With hindsight, I should've MVL'ed 2 years ago. I'm currently getting into DevOps and Cloud technologies and there appears to be a lot more outside roles in this field, so not sure if I want to MVL the company.

    I was thinking how to keep the company going in a tax efficient manner, do you think there is anything wrong with the following:

    My wife does not work, as I understand rules, you are allowed to gift your spouse shares, if I were to gift all my shares to my spouse, she could then take out dividends upto the £50k mark to keep in the 20% tax bracket each year?

    Is there anything wrong with going down the above approach?

    Before NorthernLad jumps in and says "ask you accountant?" - I don't have one currently, I think quite a few people would be in this position so might help a few people.

    Thanks,
    You can gift shares. I would probably go ahead and make her the company secretary as well. She could draw a salary and do basic admin work. This would help in the case if director passes away. Shareholder can appoint themselves as director - check articles of association. It is a pain if director passes away and there are no company reps.

    The only thing I would say that is you are giving away a part of your business to someone you trust and you can't get it back if you two separate. The monies taken by your spouse should be hers and hers only going to her own account (not a joint one) and it should be entirely up to her how she wishes to spend that money. It should not come back to you. You probably already know but I just wanted to make it clear. Good luck.

    Leave a comment:


  • gazelle
    replied
    Thanks malvolio for the reply.
    Yes familiar with the Arctic case (at least the outcome of it - which paved the way to allow spouses to earn dividends as shareholders w/o HMRC branding as income for the fee earner)
    Yes aware of the risk of handing over company to wife - that risk is always there lol

    When you say:
    "Divis, as always, have to come from retained net profits, which needs monitoring if there's no company income."
    The cash reserve in the company has already had corp tax paid on it, so what is left should be able to distribute as dividends over the next few years even though no revenue coming through?

    Just think it's a better alternative to doing MVL, at least the company is still there should I get an outside role in the near future and also money is being extracted from the company in a tax efficient manner.

    Suppose I'm still going to need an accountant as will have to submit some sort of accounts to companies house (if taking out dividends) rather than just dormant accounts

    Leave a comment:


  • Fred Bloggs
    replied
    The definitive test case to look up is Arctic Systems Ltd.

    Leave a comment:


  • malvolio
    replied
    Look up the Arctic case

    Your spouse can have shares and receive dividends with no issues. The only caveat is around making someone the major or even the only shareholder meaning you no longer control the company. That, however, is one for you to decide.

    Divis, as always, have to come from retained net profits, which needs monitoring if there's no company income.

    Leave a comment:


  • Gift my shares to spouse whose not working take out dividend each year

    Hi folks,

    I suspect many of us have ltd companies that are sitting idle whilst we are on inside IR35 roles and contemplating whether to keep company going in case of future outside IR35 roles or shut company down via MVL.

    With hindsight, I should've MVL'ed 2 years ago. I'm currently getting into DevOps and Cloud technologies and there appears to be a lot more outside roles in this field, so not sure if I want to MVL the company.

    I was thinking how to keep the company going in a tax efficient manner, do you think there is anything wrong with the following:

    My wife does not work, as I understand rules, you are allowed to gift your spouse shares, if I were to gift all my shares to my spouse, she could then take out dividends upto the £50k mark to keep in the 20% tax bracket each year?

    Is there anything wrong with going down the above approach?

    Before NorthernLad jumps in and says "ask you accountant?" - I don't have one currently, I think quite a few people would be in this position so might help a few people.

    Thanks,

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