Wife / dividends

[paynes]

Hi
Apologies if this is a common question but I'm a bit unsure of the current practise following Jones v Garnett and all the subsequent changes to law/guidance....

My wife and I are pharmacists and I have other income...we plan to set up a company owned 95% by wife / 5% by me...my wife and I will both receive salaries from the company, but my wife (who has no other income) will also receive larger divdiend each year, as a result of owning 95% of the company.

Is this arrangment possible/likely to be challenged?

Many thanks

[TDR]

As you have other income I assume that this is a result of employment elsewhere. I am also going to assume that the company will be concerned with pharmacy. Since your wife is a pharmacist, and if she will be making a significant contribution to the business of the company then you would be unlikely to be challenged under S.660. Of course, it is impossible to give a cast iron guarantee, but the Arctic Systems case did bring some clarity to the application of income shifting legislation, meaning where it is likely to be demonstrable that the party benefiting is making such a contribution then HMRC will be more reluctant to pursue the matter.