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Arctic revisited

25 June 2013
Issue: 4408 / Categories: Forum & Feedback , Income Tax

A limited company was formed to carry on the consultancy work of the client. The shares were issued equally to the client and his wife on formation

My client started a limited company to undertake consultancy work which he carried out. The 100 shares in the company were issued equally to himself and his wife.

They just did it that way without advice; at a guess I’d say that the client probably thought that because his wife was being deprived of his company while he was away working she should derive some benefit.

Clearly all the earnings of the company are from his efforts and his wife plays only a minimal part if at all. There are no or at least minimal working assets used by the company in its business.

My query is whether because there was no transfer or gift of shares to his wife HMRC would still consider that the dividends paid to his wife each year would be treated as an “income stream” under...

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