Ltd company structure - director but not shareholder
Discussion
Evening all
My wife and I are looking to start a ltd company that we'll both be investing time into in different ways, her doing the day to day stuff dealing with orders & customers once up and running, keeping financials in check etc whilst I'll be a bit more ad-hoc looking to grow the business and managing back end stuff like the website etc.
As I'm currently a higher rate tax payer it makes more financial sense for her to own the business outright but at the same time we'd both like to have a formal link to the business so is there any potential implications if I'm named as a second director? The Gov website suggests probably not as a director can be classified as an office holder not gaining financially from the position, but if there's the possibility of any real world issues with HMRC/Companies House etc then we'll just nominate her as the single director as its not that big of a deal.
cheers
My wife and I are looking to start a ltd company that we'll both be investing time into in different ways, her doing the day to day stuff dealing with orders & customers once up and running, keeping financials in check etc whilst I'll be a bit more ad-hoc looking to grow the business and managing back end stuff like the website etc.
As I'm currently a higher rate tax payer it makes more financial sense for her to own the business outright but at the same time we'd both like to have a formal link to the business so is there any potential implications if I'm named as a second director? The Gov website suggests probably not as a director can be classified as an office holder not gaining financially from the position, but if there's the possibility of any real world issues with HMRC/Companies House etc then we'll just nominate her as the single director as its not that big of a deal.
cheers
Edited by LocoBlade on Wednesday 11th January 23:55
Eric Mc said:
kiethton said:
Also possible to have a share structure which has A and B shares with equal voting rights but different dividend rights etc....
Possible but open to scrutiny by HMRC who are wary of such set-ups.The simplest set up is for you to be listed as a director but not take a salary.
Whether you want to be a sharholder is up to you but it does mean that, if a dividend is declared, then you may want to waive your right to your share of the dividend. If that is the case, you will need to keep formal documentation proving that you agreed to waive your right to your dividend. Again, HMRC can take an interest in waived dividends if they think that the prime purpose of the waiver was just to avoid tax.
Finally, if you decide to be a director, you will need to decide which one of you is going to be the official Person Of Significant Control (PSC) as this has to be notified to Companies House and will be on the public record.
Whether you want to be a sharholder is up to you but it does mean that, if a dividend is declared, then you may want to waive your right to your share of the dividend. If that is the case, you will need to keep formal documentation proving that you agreed to waive your right to your dividend. Again, HMRC can take an interest in waived dividends if they think that the prime purpose of the waiver was just to avoid tax.
Finally, if you decide to be a director, you will need to decide which one of you is going to be the official Person Of Significant Control (PSC) as this has to be notified to Companies House and will be on the public record.
Thanks Eric, yep I understand shareholders and dividends payments etc and I'm not interested in doing anything clever with split share types or deferring dividends, I guess I just wanted to ensure that simply by being a director of my wife's company with no shares of my own there couldn't be any risk of being advised of tax avoidance a similar way.
I wasn't aware of the director with significant control though thanks, from a quick Google it suggests anyone with 25% or more of the shares is considered a PSC so my wife would certainly tick that box, I'll do a bit more reading when I get home from work to determine if I'd also be considered one or not.
I wasn't aware of the director with significant control though thanks, from a quick Google it suggests anyone with 25% or more of the shares is considered a PSC so my wife would certainly tick that box, I'll do a bit more reading when I get home from work to determine if I'd also be considered one or not.
LocoBlade said:
Thanks Eric, yep I understand shareholders and dividends payments etc and I'm not interested in doing anything clever with split share types or deferring dividends, I guess I just wanted to ensure that simply by being a director of my wife's company with no shares of my own there couldn't be any risk of being advised of tax avoidance a similar way.
I wasn't aware of the director with significant control though thanks, from a quick Google it suggests anyone with 25% or more of the shares is considered a PSC so my wife would certainly tick that box, I'll do a bit more reading when I get home from work to determine if I'd also be considered one or not.
Shareholding is only one criteria for deciding who is a PSC. However, the other measurements are more escoteric and harder to prove. In theory, a PSC could be someone who isn't a director and holds no shares but might exercise control over the company in some more hidden way.I wasn't aware of the director with significant control though thanks, from a quick Google it suggests anyone with 25% or more of the shares is considered a PSC so my wife would certainly tick that box, I'll do a bit more reading when I get home from work to determine if I'd also be considered one or not.
Thanks I should have perhaps mentioned I did run it past my wife's current sole trader accountant who we'll use for this venture as well who said much the same thing so I'm not solely relying on advice from here, but glad it concurs as the specifics are not something easily answered by a Google 
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