FMATT old route, Fellow status 1995. Sold general accountancy practice 2004 to concentrate of Company Services. Member of the International Compliance Assocation gaining graduate diplomas in anti-money laundering and financial crime prevention, FICA (Dip.AML, Dip.Fin Crime). Member of the Institute of Money Laundering Prevention Officers (IMLPO).
Worked and continue to work with a number of AML supervisors and have written guidance and tool kits for compliance as well as presented at over 100 seminars and in house training sessions, many with SOCA. Member of the UK Government National Risk Advisory committee, evaluating the UK risk from money laundering fulfilling FATF's latest guidance.
Currently training as an 'Expert Witness' for AML with The Academy of Experts at 3 Grays Inn London
Company services business is aimed mostly at the professional client, accountants and solicitors and covers many aspects of corporate legal services from formation to the drafting of articles, restorations and share dealings and transactions.
Having been through this, Companies House will want your letter of engagement for the service, and invoice showing the charge and then your letter of disengagement. They after accepting these will then contact the directors for them to dispute the fact that they cannot use the registered office, if the directors say they can, then Companies House will advise you that you will then need court approval for the change as they cannot.
I had been returning post for months to Companies House, I had pointed out to the team there that I was obliged in this instance that under the ML regulations I had to cease all transactions with the client, basically that had no effect with them at all.
ML Regs 2017 Article 26 Prohibitions
No person may be the beneficial owner, officer or manager of a firm of auditors, insolvency practitioners, external accountants and tax advisors unless that person has been approved by the supervisory authority of the firm
Introduction a new criminality test “to prevent criminals convicted in relevant areas or their associates from holding a management function in or being the beneficial owners of those obliged entities”
This also applies to all law firms, and is an extension of the fit and proper test for TCSP's, which many accountancy firms will also have to register with HMRC for the public register even if you just offer a registered office service. Closes a 10 year loop hole.
They are described as BOOM's so it also beneficial owners such as wives, any officer including the MLRO or payroll or office managers
Commerical reseans are required
Where a close company declares a dividend and one or more of the shareholders waives the dividend in circumstances where other shareholders may benefit, there may be an arrangement where the Settlements legislation could apply.
In such cases, we argue that the person making the waiver has indirectly provided funds for an ‘arrangement’ or ‘settlement’ by giving up a sum to which he or she is, or may become, entitled. The bounty will be represented by the enhanced part of the dividend that the non-waiving shareholders received.
Such a dividend waiver is a settlement of income and where the person benefiting under the arrangement is a spouse, civil partner the settlor will have retained an interest and ITTOIA/S624 will apply.
Below is taken from HMRC guidance on different share classes
Example 12 - dividend waivers
Mrs H owns 80 A Ordinary shares in H Limited. Mr H owns 20 B Ordinary shares. In 2000, the company made a profit of £25,000. Both A and B shares rank equally. Profits of £25,000 are made and a dividend of £20,000 is voted on the B shares while no dividend is voted on the A shares.
Clearly by not voting dividends on the A shares (which rank equally with the B shares) this is a bounteous arrangement as the dividend paid on the B shares could only be paid if no dividend was declared in respect of the A shares. £16,000 of the dividend paid to Mr is attributed to Mrs H under section 624 because the decision only to vote dividends on certain shares was a bounteous arrangement.
Whether or not the Settlements legislation applies to an arrangement depends on the particular facts of the case. It is necessary to look at the arrangement as a whole. If there is a bounteous arrangement which effectively transfers income earned by one person to another resulting in a reduction in overall tax liability the arrangement may be liable to challenge under the Settlements legislation.
A purely commercial transaction or series of transactions at arms length is outside the meaning of ‘settlement’. Most commonly the legislation will apply where individuals seek to divert income to members of their family or to friends.
If you want to incorporate your company with A & B shares ranking equally with an authority for the director to declare different dividends we can do this as standard as part of your incorporation package visit our webpage
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The Business AML searches are also quite unique, now linking to Companies House monitor services and document downloads for on-going monitoring, it is the only platform that does both individual and business.
Business Tax Centre Ltd
Check Scotland & Ireland
There are many members of the ICAS and & ICAI who practice quite happily in England, before jumping to any conclusions I would check those out. On the second point all firms not matter if they are chartered or not must be supervised for MLR compliance, however a simple number does indicate HMRC Registration rather than a practice licence number. HMRC registration numbers currently are 126xxxxx, 8 digits.
They are reviewed
The latest figures I have to hand from the SARs annual report for 2011/12 is that the whole of the Accountancy and tax sector files a total of 5,893 in the year compared with 239,738 for the financial services sector. I believe the Lloyds banking group is the largest filer with over 70,000. They also deal with around 40,000 production orders a year from HMRC and DWP concerning tax evasion and benefit fraud.
To go a bit further on David’s point, after 7 days the information on a SAR is made available to local constabularies and HMRC if they claim it, where it is reviewed by a dedicated SAR’s officer who will read it compare to their local intelligence database and check the police national computer records. The SAR’s officers will then make a decision on what to do. The only local force who do not have a manual system for review is the Met which uses data mining software instead but they are reviewed, this is down to the sheer volume of they receive.
A piece of anecdotal evidence once given at an event was that over 60% of SAR’s submitted for tax evasion only purposes, when reviewed by the police the subjects of the SAR where already known to the police for other matters.
Depends on the articles of asociation
This is one of those problems with the model articles under the 2006 Act, if the situation is the company has model articles, then when the sole shareholder/director (and there is no secretary) dies the relatives have the right to the income from the shares, but they cannot appoint a director, this also applies to the transfer of shares, in that scenario the assets belong to the Crown. This is because there is no current appointed officer to make the relevant entries into the registers of the company
If the articles the company uses was under the 1985/89 Act this does not apply, if however it was incorporated after October 2009 you need to check the articles, the one we use for incorporation for our clients we have the following clauses inserted into the articles as standard, called a living will clause, which gets around the scenario under the 2006 Companies Act.
(3) In any case where, as a result of death, the Company has no shareholders and no directors, the personal representatives of the last shareholder to have died have the right, by notice in writing, to appoint a person to be a director.
(4) For the purposes of paragraph (3), where 2 or more shareholders die in circumstances rendering it uncertain who was the last to die, a younger shareholder is deemed to have survived an older shareholder.
If you are under model articles then the only place that decide the outcome is the Courts.
Business Tax Centre Ltd
You just can't sack an office holder
You cannot just ‘sack’ a director from their post as an officer holder, there are Companies Act requirements, see below
Under ss. 168 and 164, a company may by ordinary resolution remove a director at any time regardless of anything to the contrary in the articles of association or in any agreement with the director. However, a written resolution may not be used to remove a director.
Special notice must be given to the company of the intention to propose such a resolution, and a copy of such notice must be sent to the director concerned, who may make representations in writing to the company and may request their circulation to the members of the company. Should the company receive such special notice, considerable care should be taken that the requirements of ss. 168 and 169 are strictly complied with.
The resolution may be proposed for submission at the next following annual general meeting, though it could be dealt with at an extraordinary general meeting provided that the special notice was served on the company within the time limit specified in s. 312.
The director to be removed can have legal representation at the meeting to put their case, failure to go through these procedures leave the company wide own for basically being sued and opening up the whole can of worms.
On the subject of the transfer of shares both parties should have signed a stock transfer form and the appropriate entries made in the registers. If the shares were from an allotment that was never performed by the director they are precedents under company law that state the rights of the shareholder should not be reduced due to wrong doing or mistake by the directors, implied allotment would probably be legal considering dividends paid again it, which of course is voted for by the directors.
You cannot advise all parties, so I would try to be impartial as I could and may the company the client not any individual party, and give advice from the company’s point of view
Just make sure the paper work is right
If it is a possibility that solicitors will be involved with divorce proceedings you need to get this one right.
Firstly new articles new drafting for the new class of shares and prescribed rights need to be listed within, and the directors’ authority to allot those shares also needs doing, best by putting this in the newly revised articles, I would also suggest a clause within the articles allowing the director the right to vary dividend amount etc between the classes, (great if separation does occur while the solicitors sort out her worth).
These are filed at Companies House along with a (written) resolution of the exiting member. The allotment of the new share class can take place any time after the date of the members meeting. Form 42 may not be necessary since you seem to say the wife does not work within the business.
Do not forget to make her pay the £1 per share direct to the company and issue the share certificate. And make the appropriate entry into the register of members.
In response to
I would not bother with any paperwork as the risk of the Crown trying to collect the debt is, in my opinion, so negligible that life is too short to worry about it. However for those of a more nervous disposition a simpler way of reducing the negligible risk to zero is surely for the subsidiary to waive the loan (formally, under seal). Much easier than reducing the share capital.
There are a number of issues, firstly you cannot reduce share capital without a court order or a formal declaration of solvency any way, this is the way of getting rid of the liability. Ending a company is subject to the Insolvency Act as well as the Companies Act. Striking off is he informal version but subject to all the same rules. You may be also starting off on the wrong foot if the articles of the company does not allow for unpaid shares in which case you cannot write off any debt because there is no legal basis, however if the articles do have liens and forfeiture clauses you could do the paperwork for that, but it would be simpler and quicker to do the capital reduction scheme.
Secondly the capital route for waver by the Crown was changes in October 2011. The effect of this is that in theory, the Treasury Solicitor may pursue any distribution of capital not made in accordance with Company Law. The rationale behind this decision is that the implementation of the CA 2006 now makes it easier to reduce a company’s share capital.
Under Section 641 of the CA 2006 a private company may effect a reduction of its share capital by special resolution supported by a solvency statement made by the directors. Otherwise, a company may only make a return of capital to shareholders:-
by a reduction of share capital;where the company redeems or purchases its own shares;where there is a distribution of assets to members in a winding up
So a cavalier approach to the debt, would mean it is treated as income and not capital and may lead to an addition to the P&L and therefore taxable, or the Crown might just say I want it.
Business Tax Centre Ltd