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Minor shareholders and settlement legislation

Minor shareholders and settlement legislation

Good morning
I am getting confused with the settlement legislation.
Client is setting up a company and wants to make her spouse and 2 minor children shareholders.
My understanding is that the children's dividends have to be kept separate although they are taxed on the parent. Could someone please confirm this is the case (i.e. She can not use that money as her own)? This would affect her decision on how to best extract profits.
I would also appreciate any advice on how the dividends paid to the children are subsequently taxed, are they just added back to the mother's dividends (or split between parents?).
Thank you

Edit: maybe I should add that the mother would be the only director, the husband doesn't participate in any capacity in the company.

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By Rweaver
05th Mar 2016 14:26

Will the shares in question be subscriber shares?

Will the company be acquire a trade formally carried on by mother?

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05th Mar 2016 14:47

New company
Hi thanks for responding.
This is a new company, not incorporating a previous trade. The shares will be issued on the formation of the company to the 4 shareholders (parents and children) so not a gift or sale of existing shares by the client.

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By Rweaver
05th Mar 2016 15:00

In which case...
I'm probably missing the point, but where's the settlement?

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07th Mar 2016 14:49

No definitive answer?

Rweaver wrote:
I'm probably missing the point, but where's the settlement?

Indeed I can not find a definitive answer when the company is created with children as shareholders. In the article by Nicola RossMartin it refers to cases where there is a gift or sale.
https://www.accountingweb.co.uk/topic/tax/tax-basics-settlement-provisio...

I would welcome other members view on this. Thank you

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05th Mar 2016 15:18

Arrangement
One could argue there is a bounteous arrangement?
http://www.hmrc.gov.uk/manuals/tsemmanual/tsem4320.htm

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