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Ask Jeremy Aldermartin Your Own Question
Jeremy Aldermartin
Jeremy Aldermartin, Solicitor
Category: Employment Law
Satisfied Customers: 8382
Experience:  Dual qualified Solicitor and Attorney
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I own a limited company I use for IT contracting services

Customer Question

Hello, I own a limited company I use for IT contracting services (M.R. IT CONSULTING LTD https://find-and-update.company-information.service.gov.uk/company/10747179 ). Both my wife and I are directors of the company. I have 10 ordinary shares and my wife 1 A share with the full power of vote and dividends. My question is related to dividends. Considering our shares allocation, which would be a fair percentage of dividends I could give to my wife? Can we split 50-50? Can I give more to her?Many thanks
Michele
Submitted: 20 days ago.
Category: Employment Law
Customer: replied 20 days ago.
File attached (M5P22QP)
Expert:  Jeremy Aldermartin replied 20 days ago.

Hi thank you for your message, please note that I will look to provide an accurate but nevertheless speedy reply to your inquiry. I am sorry to hear about your situation but I will endeavour to help you today.

Expert:  Jeremy Aldermartin replied 20 days ago.

So your wife and have different shares i.e. you have 10 ordinary shares but she has one 1A share?

Customer: replied 20 days ago.
Hi Jeremy, yes that's right. I've attached companies house documentation
Expert:  Jeremy Aldermartin replied 20 days ago.

I understand, so you can in essence pay what you want in terms of dividends and if the only persons in the company are you and your wife you could decide for example that you get 10% dividends and your wife gets 90% or you split it 50/50 entirely up to you basically. I trust this assists

Expert:  Jeremy Aldermartin replied 20 days ago.

Let me know if you have further queries

Customer: replied 20 days ago.
Could HMRC dispute if I used a 50-50 split or even a 30 (me) - 70 (wife) split?
Expert:  Jeremy Aldermartin replied 20 days ago.

No, it is up to you just make sure it is recorded properly with a board declaration.

I trust this assists you in understanding your position however, should you have any supplementary inquiries, do not hesitate to ask and I will look to clarify or expand on my previous response.

Customer: replied 19 days ago.
Hi Jeremy, my accountant mentioned the Buck vs HMRC case where no errors were made in the share allocation or paperwork however Buck still lost his case?
Expert:  Jeremy Aldermartin replied 19 days ago.

That is to do with dividend waivers and income tax in any event, that is not the same as an uneven distribution of dividends. I trust this assists

Customer: replied 19 days ago.
it won't be the same situation which I can found myself in? Also, I created dividends declaration using an accountant tool (freeagent). In that there is no reference to the A Share. Would that be an issue? Thanks
Expert:  Jeremy Aldermartin replied 19 days ago.

Thank you for your message, it is a different situation yes. In terms of the dividend declaration is should cover all the shares and share types if you are declaring dividend for those share types. If not then you can just saying dividend declaration but for ordinary shares, no dividend for A shares or whatever you want to say. I trust this assists

Customer: replied 15 days ago.
Hi Jeremy, thanks for the support, however wondering if HMRC can start a Section 660A investigation?
Expert:  Jeremy Aldermartin replied 15 days ago.
I don’t see they would here but there is a good discussion on this point here: https://www.contractorcalculator.co.uk/s660a_family_tax_.aspx
Trust this assists
Customer: replied 15 days ago.
I wanted to buy a tax enquiry insurance however I can see they do not cover Section 660A in the case of alphabet shares, so i'm trying to understand if it would be better to change the shares structure (e.g. splitting 50-50 ordinary shares with my wife?)
Expert:  Jeremy Aldermartin replied 15 days ago.
If you wanted to avoid the risk completely then changing the share structure works. I trust this assists.