A company currently has two full time directors with shares split 60:40. Other than their connection through the company, they are unrelated.
They do not currently take salaries from the company but take rents for the company's use of the business premises and dividends, both pay higher rate tax and director A (60%) has another source of income.
Director B (40%) has a requirement for a higher level of income from the company than director A and director A is quite happy for him to do so.
It has been suggested that the current ordinary shares be split into A (60%) and B (40%) to enable different rates of dividends to be paid, but retaining rights to 60:40 capital on a sale, wind up etc.
I feel that if the directors had been say, husband and wife, then potentially the settlements legislation could be in point, but has anyone any experience of HMRC arguing the point in the scenario outlined above?