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Can I add shareholder to avoid tax

Adding shareholder to avoid tax

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I have limited company. Can I add anyone (my friend) as shareholder and get the dividend on hos name to avoid some percentage of tyax? Is this legal.

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By johngroganjga
12th Dec 2019 16:02

Yes you will avoid tax, but you will do so by avoiding the income. If you think that is a good idea you are not thinking straight.

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By paul.benny
12th Dec 2019 16:06

Yes...but

If your friend is a shareholder, those shares come with all sorts of rights, including voting on directors, ability to sell the shares.

If your friend receives a dividend, that dividend belongs to him. It's taxable on him (and affects any rights to benefits), so he might not actually want it. And because the dividend belongs to him, he might not want to pass it back to you.

Or are you thinking of an imaginary friend?

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By Tax Dragon
12th Dec 2019 16:07

What a nice Christmas present for your friend!

If you look back, amit2452 asked a similar question around this time last year.

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Hitch photo
By Kevin Kavanagh
12th Dec 2019 16:09

Why not add 3 or 4 friends and make it even better...Happy Christmas!

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By Wanderer
12th Dec 2019 16:09

amit2453 wrote:

I have limited company. Can I add anyone (my friend) as shareholder and get the dividend on hos name to avoid some percentage of tyax? Is this legal.

Hi Amit
You've previously said:-
amit2453 wrote:
I am a director of a limited company. My VAT filing is handled by my accountant ....
. It would be best to speak with him / her and take their advice.
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Red Leader
By Red Leader
12th Dec 2019 16:20

Ha ha ha ha ha!

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Replying to Red Leader:
Psycho
By Wilson Philips
12th Dec 2019 16:24

Surely it's

Ho ho ho ho ho!

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Psycho
By Wilson Philips
12th Dec 2019 16:25

Yes - you can add anyone (me) as a shareholder and that will reduce your tax. I might even pay you for the shares.

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RLI
By lionofludesch
12th Dec 2019 16:26

Can I be your friend ?

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My photo
By Matrix
12th Dec 2019 16:44

How much is the friend paying for the shares? And will they give the dividend straight to you?

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By ireallyshouldknowthisbut
12th Dec 2019 17:14

Ill happily take your money if you don't want it. No bothered about the tax bill on free cash.

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Replying to ireallyshouldknowthisbut:
RLI
By lionofludesch
12th Dec 2019 17:30

There's a lot of volunteers on this thread.

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By amit2453
12th Dec 2019 19:55

Thanks all for your responses and volunteers ;-) but after doing some research, its suggested that person should be your spouse else HMRC could trouble with settlements legislation (formerly known as Section 660) :-(

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Replying to amit2453:
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By SXGuy
12th Dec 2019 20:50

amit2453 wrote:

Thanks all for your responses and volunteers ;-) but after doing some research, its suggested that person should be your spouse else HMRC could trouble with settlements legislation (formerly known as Section 660) :-(

I think you have completely misunderstood section 660.

Having your spouce or indeed any person as a shareholder who does F all work for the company is exactly who section 660 is aimed at.

In other words giving shares to your wife has no impact on avoiding settlements legislation since its aimed specifically at avoiding paying extra tax and ni. I doubt very much your wife will buy the shares and I doubt she will be bringing in 50% of the income either.

I think you should have the decency to at least speak to your own accountant before asking others.

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Replying to SXGuy:
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By bernard michael
13th Dec 2019 10:02

SXGuy wrote:

amit2453 wrote:

Thanks all for your responses and volunteers ;-) but after doing some research, its suggested that person should be your spouse else HMRC could trouble with settlements legislation (formerly known as Section 660) :-(

I think you have completely misunderstood section 660.

Having your spouce or indeed any person as a shareholder who does F all work for the company is exactly who section 660 is aimed at.

In other words giving shares to your wife has no impact on avoiding settlements legislation since its aimed specifically at avoiding paying extra tax and ni. I doubt very much your wife will buy the shares and I doubt she will be bringing in 50% of the income either.

I think you should have the decency to at least speak to your own accountant before asking others.

The OP probably has but doesn't like the answer

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By krix_wm
13th Dec 2019 12:21

What tax are you trying to avoid? Having shareholders you will still be paying CT.
PT? You will pass liability to somebody else, unless you pay minimum amount which is not taxable.

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Red Leader
By Red Leader
13th Dec 2019 13:23

Methinks that circularity is the unspoken element.

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By JDBENJAMIN
14th Dec 2019 23:57

You can even give all your shares to your friend and pay no tyax! This is legal, and all subsequent dividend tax will be hos.

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