16 June 2005
A client, a small limited company, provides services to a range of customers. There is very little on the balance sheet. The company is owned, one share each by husband and wife, Mr and Mrs A.
The following points are relevant.
A client, a small limited company, provides services to a range of customers. There is very little on the balance sheet. The company is owned, one share each by husband and wife, Mr and Mrs A.
The following points are relevant.
- Mr A is a director, Mrs A is company secretary; they both used to work in the business, but he now works elsewhere and she does all the day-to-day work. There are no other employees.
- Mrs A is paid a sensible salary, but this leaves a reasonable amount to be paid in dividends.
- Mr A is a higher-rate taxpayer due to his work elsewhere, Mrs A is well under the 40% limit.
If Mr A gives his share to Mrs A, has it now become 'wholly or mainly a right to income' and therefore caught by TA 1988, s 660A?
We should be grateful for readers' thoughts on this potentially complex matter.
Query T16,626
