Husband and wife company both directors with wife as company secretary own 10 ordinary shares each. Wife's only income is from the company, but husband has a higher rate tax paying salaried job elsewhere. Company has undistributed reserves and given the tax on dividend changes from 2016/17, I am considering changing the current shareholdings to 10 ordinary A shares and 10 ordinary B shares and voting a dividend on the wife's new B shares prior to 5 April 2016. The share rights will not be altered in anyway.
Good planning or possible problems/HMRC attack? Wife does not generate much/any of the company income but does do all admin and bookkeeping.
Thanks
Related resources
Replies (5)
Please login or register to join the discussion.
"The share rights will not be altered in anyway"
No point in reclassifying the shares, then! What you mean is that the A & B shares will have the same rights except that different dividends can be declared on each class.
This is just a re-classification of the existing shares. There are no tax implications and no scope for HMRC attack, even if they knew about it, which they won't. If the directors choose to declare differential dividends at a later date, it is up to them.
Settlement provisions could be wheeled in
if the wife is thus scooping up all the remaining distributable profits. Its unlikely but you could get a jobs-worth enquiring in to the company. I would hope that HMRC have better things to do as their track record on this is not brilliant.
If you are a subscriber to our site www.rossmartin.co.uk there is chapter and verse on this in Companies > Running the Business > Settlements, if not then take a peek at our case summary Patmore v HMRC.
For the benefit of other members, I will repeat the question in your PM to me:
I assume that forms SH08 and SH10 are required at Companies House along with the minutes of meeting etc?
In addition to forms SH08, (Re-)Designation of Shares, and SH10, Variation of Rights, you will certainly need appropriate Minutes of a Meeting of the Directors, and quite possibly also amended Articles. Although the 2006 Model Articles allow the company to issue different classes of shares (Article 22), you may need to amend the Articles if the company has adopted tailored Articles in which Article 22 has been modified and will certainly need amended Articles if they were based on the 1985 Table A.
1985 Articles?
And if the company was incorporated before the 2006 Act you will need to submit form CC04 with the copy of the replaceent articles because you will be removing the objects clause.