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Where Taxpayers and Advisers Meet

Tax no remuneration - HMRC reaction?

Cap_Scarlet
Posts: 22
Joined: Sun Jun 17, 2018 2:59 pm

Tax no remuneration - HMRC reaction?

Postby Cap_Scarlet » Wed Apr 17, 2019 12:23 pm

I have a limited company with two directors, myself and my wife.

I am the fee earner for the company, and my wife is company secretary and accountant.

I don't need to take any earnings from the company as I have sufficient income from other sources, however I am paying my wife and a salary as well as a dividend (we have two classes of shares A & B, I own only A shares and my wife owns both A & B shares - we only paid dividends on the B shares).

Effectively this means that my wife is the only person drawing an income from the company.

Any issues from HMRC perspective?

SteLacca
Posts: 443
Joined: Fri Aug 07, 2015 2:17 pm

Re: Tax no remuneration - HMRC reaction?

Postby SteLacca » Thu Apr 18, 2019 12:06 pm

With regards to the salary paid to your wife, it should be commensurate with the work she does (and so a salary that would be paid at arm's length to a 3rd party) to remove any chance of a successful challenge from HMRC.

Dividends are a slightly different matter, and the devil is in the detail. HMRC don't like arrangements which they view as income shifting. Alphabet shares are a little more robust than, for example, dividend waivers in this regard. However, care still needs to be taken.

You may want to take a look at Arctic Systems (https://publications.parliament.uk/pa/ld200607/ldjudgmt/jd070725/jones%20-1.htm) for some pointers.


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