Reply to: Adding a foreign shareholder / director

[SueEllen]

I live a very cheap life.. I am not even a “technology zombie” just I have been paying some finances on my ex car.. so a chunk of my money is lost every month.

You know guys ,, thanks for the advice… it has driven me to the conclusion that its not worthy..

I think I was over reacting regarding my “screenshot finances” including one or two shareholders… it makes bugger all difference on my tax returns..

I do have loads of expenses.. also I do 500 miles a week.. running a 2.2 litre engine on LPG.. basically my mile only cost me 12p per mile… so some “extra revenue on that”

FFS get an accountant and do your expenses properly.

[Platypus]

and if the worst case scenario happens.. (my ex wants the company)… she can have it all and run it herself! ..I just start another one.

I was going to suggest just that!

[conejo1979]

If you can't survive on that maybe you need to look at your lifestyle choices?

I live a very cheap life.. I am not even a “technology zombie” just I have been paying some finances on my ex car.. so a chunk of my money is lost every month.

You know guys ,, thanks for the advice… it has driven me to the conclusion that its not worthy..

I think I was over reacting regarding my “screenshot finances” including one or two shareholders… it makes bugger all difference on my tax returns..

I do have loads of expenses.. also I do 500 miles a week.. running a 2.2 litre engine on LPG.. basically my mile only cost me 12p per mile… so some “extra revenue on that”

Perhaps bite the bullet on it, become just the only shareholder… and if the worst case scenario happens.. (my ex wants the company)… she can have it all and run it herself! ..I just start another one.

[TheFaQQer]

Well, my second post in a year (on my first I was called troll!!)

I find that hard to believe based on your posting history

[TheFaQQer]

Let’s say He will keep his money just like my current shareholder is keeping hers.. so tax man will continue to receive same money as before..

Let's say that HMRC see this as an artificial tax avoidance measure and taxes you on that income instead of him.

It is a pain?? Of course it is… is a big hassle having all this headache with your business (and personal life) and is very inefficient from a business point of view….... but this will only last a year or two….

And you think that buying the 50% stake from your current shareholder, then selling it to someone else who is overseas and can keep the money to themselves is going to be less of a pain?

Does the current 50% shareholder want to sell you the stake? If not, then this whole scenario isn't going to go anywhere.

Are you planning to close down after this couple of years? If not, then you'll be looking to buy back that 70% stake in the company from this unconnected person when you want it back. You could, of course, get them to waive the rights to receive any dividends every time you declare them, but since they will be the majority shareholder that isn't going to happen. If someone gave me 70% of their company, then I'd be wanted something pretty impressive to stop me taking the dividends that I'm entitled to.

That all said, you won't be able to close down without their permission, so that could be a moot point as well.

And you think this is going to be less of a pain?

The divorce settlement will be calculate on a financial “screen shoot” of two tax years… as soon as that “screen shot” is taken… I will be able to run the business properly…

As I've said above - you won't be running the business at all, if the other shareholder doesn't want you to. They now own 70% of the company, so it's down to them how the company is run.

Perhaps showing yourself as earning a “decent salary” and get stuck with an spouse maintenance for the rest of your life … (based on a 48k income) is less or more of a risk than playing with fire with the tax man ?

Paying maintenance isn't a risk at all, so it must be less than a risk of trying to implement a dodgy artificial tax avoidance measure.

[northernladuk]

Changing shareholdings is one of the flags to HMRC as well I believe. The risk of a single change maybe minimal but constantly changing it will being you to their attention. It isn't a very good idea to create a tax evasion setup using a process that can attract attention is it.

[northernladuk]

Let’s say He will keep his money just like my current shareholder is keeping hers.. so tax man will continue to receive same money as before..

But he isn't your wife. There are concessions for giving dividends to your wife, there are not for your friends. That means legally the taxman expects more, not the same. Your circumstances have changed so will your tax. Think about it a little bit will you. Read the S660 link to the right and understand it.

It is a pain?? Of course it is… is a big hassle having all this headache with your business (and personal life) and is very inefficient from a business point of view….... but this will only last a year or two….

The divorce settlement will be calculate on a financial “screen shoot” of two tax years… as soon as that “screen shot” is taken… I will be able to run the business properly…

Perhaps showing yourself as earning a “decent salary” and get stuck with an spouse maintenance for the rest of your life … (based on a 48k income) is less or more of a risk than playing with fire with the tax man ?

It's more playing with fire with your relationships and adding spouses to your business IMO. It's your problem not the taxmans. All you have to do is run your business properly observing certain rules that are in place. It isn't a hassle. There are a million plus contractors doing it and god knows how many other businesses out there doing it as well. It is just you are trying to screw your business, all the others aren't.

Why don't you get an accountant? He will save you the money you are wasting here.

And anyway... if you have 60K turnover, less 20% = 48k. That isn't taking expenses in to account.. If you can withdraw 8k plus 32k divs surely you are going to be under, or very close to your threshold so it's only minimal amounts of tax if any. And where is your warchest?

If you can't survive on that maybe you need to look at your lifestyle choices?

[conejo1979]

So let me get this straight... You are going to give him your money to give you back.. How exactly is that him paying of his debt? HMRC are going have a field day with you.

You are obviously fiddling your business which is aggressive tax avoidance at best and I could see a case for evasion here.

Time to think about running your business properly hey?

Let’s say He will keep his money just like my current shareholder is keeping hers.. so tax man will continue to receive same money as before..

It is a pain?? Of course it is… is a big hassle having all this headache with your business (and personal life) and is very inefficient from a business point of view….... but this will only last a year or two….

The divorce settlement will be calculate on a financial “screen shoot” of two tax years… as soon as that “screen shot” is taken… I will be able to run the business properly…

Perhaps showing yourself as earning a “decent salary” and get stuck with an spouse maintenance for the rest of your life … (based on a 48k income) is less or more of a risk than playing with fire with the tax man ?


Thanks for the advise, and the facts on the subject.. (moral immoral responsible / irresponsible.. all irrelevant .. just legal or not legal.

ps: she is not a current shareholder and is not aware of my company (I used to be a permie)

[northernladuk]

I think I will store this for 'the why shouldn't I give my gf/wife half my company, we are not going to split up' threads.

To be honest I don't think it is worth giving the OP any advice. It clearly isn't going to be what he wants to hear and with this poor attitude to his responsibilities of running a business I don't think he will take it anyway.

So... to cut a long thread short... Go ahead, allocate the shares, you will have no problems.

[TheFaQQer]

More or less .. he will just be paying me some old debt using his dividends..

So not repaying the debt at all, just taking money from you to reduce your tax bill and then giving it back to you.

Unfortunately as you could see, my turnover is pretty poor, so keeping money in the company will be a painful task.

How is it painful to not do anything with it?

. also as per the latest big court ruling… divorce proceedings can milk limited co. money (oil tycoon case)

She'll still get half of everything. So, you buy back the 50% from whoever owns it at the moment (if it's her, then why should she sell to you?), and then sell 70% to someone else. Then she takes half of what's left with you anyway, so you now need to pay higher dividends to make up for that loss, or a big lump sum up front, which you can pay for from the sale of 70% of the company. After that, if she's that bitter, she then rings HMRC and tells them that you are avoiding tax by giving your company to an off-shore entity, and they come and ream you.

Sounds like a good plan to me

[northernladuk]

More or less .. he will just be paying me some old debt using his dividends..

Unfortunately as you could see, my turnover is pretty poor, so keeping money in the company will be a painful task.. also as per the latest big court ruling… divorce proceedings can milk limited co. money (oil tycoon case)

So let me get this straight... You are going to give him your money to give you back.. How exactly is that him paying of his debt? HMRC are going have a field day with you.

You are obviously fiddling your business which is aggressive tax avoidance at best and I could see a case for evasion here.

Time to think about running your business properly hey?

[conejo1979]

So, what you are saying reading between the lines is the other shareholder will tip some or all of the divs back to you or are you just giving money away?

Why not just leave it in the company?

More or less .. he will just be paying me some old debt using his dividends..

Unfortunately as you could see, my turnover is pretty poor, so keeping money in the company will be a painful task.. also as per the latest big court ruling… divorce proceedings can milk limited co. money (oil tycoon case)

[stek]

So, what you are saying reading between the lines is the other shareholder will tip some or all of the divs back to you or are you just giving money away?

Why not just leave it in the company?

[conejo1979]

Check this post and have a fundamental think about your situation before you even start on offshore shareholders..

http://forums.contractoruk.com/accou...reholders.html

Thnaks for the fast replies

Family member will not be a shareholder..

Now it makes absolutely sense not to do it from the TAX point of view.. in fact, I will not “make any money” from the tax “savings” , so in theory the tax man will carry out receiving what he is receiving at the moment..

Now, my aim its purely to reduce my taxable or earning “capability” (showing myself as poor as possible on my tax returns)

The only person I will upset, will be my future divorcee ex… as due to my reduced yearly income and “proved earning “, the settlement will be more fairer

As you could see its got nothing to do with paying les tax..

Ps: please I am not looking for morality or “I believe this or that” just facts

ps: I do a an accountant (but is those internet agencies that have everything pretty much set up.. so anything different, they cant be asked to investigate)

[TheFaQQer]

The second shareholder wants to leave the company..

Shareholders don't "leave" a company - they get rid of the shares that they hold in the company.

Can I incorporate a foreign shareholder instead in to my company.?

Yes - sell them some shares.