Income splitting: Hypothetical question
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Registered Posts: 1,037 Beyond epic contributor 🧙♂️
Purely a hypothetical question that has come about from me re-visting articles on Artic Systems (here and here).
Lets say that there is a limited company owed by two shareholders (son and mother, each owing 1 x £1 share), and lets say that only the son withdraws money from the company.
For tax purposes, can the shareholders still draw up dividend vouchers and declare a 50:50 split on their tax returns despite the actual bank transfers showing a split of 100:0.
I'm assuming the answer is "no" but am just interested in how MiP's deal with income splitting and drawings by directors in practice.
Lets say that there is a limited company owed by two shareholders (son and mother, each owing 1 x £1 share), and lets say that only the son withdraws money from the company.
For tax purposes, can the shareholders still draw up dividend vouchers and declare a 50:50 split on their tax returns despite the actual bank transfers showing a split of 100:0.
I'm assuming the answer is "no" but am just interested in how MiP's deal with income splitting and drawings by directors in practice.
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Comments
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I don't see any issues with this and have seen it done many times, the argument would be that the shareholder/director who is taking money out sorts it out between his son and himself (For the record I've never seen it come to this!).
I've never seen a challenge from HMRC on this, and how could they mount a real challenge if both shareholders are happy with the current arrangement.
Most husband and wife structured companies I have seen operate this way via the husbands loan a/c (as the wife is not normally a director, only a shareholder).0 -
I don't see any issues with this and have seen it done many times, the argument would be that the shareholder/director who is taking money out sorts it out between his son and himself (For the record I've never seen it come to this!).
I've never seen a challenge from HMRC on this, and how could they mount a real challenge if both shareholders are happy with the current arrangement.
Most husband and wife structured companies I have seen operate this way via the husbands loan a/c (as the wife is not normally a director, only a shareholder).
Thanks - that makes sense - I tend to see the same thing at work too0
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