Daughter as a director? - The Book-keepers Forum (UK)

Pete · Member

Daughter as a director?

RSBookkeeping · Veteran Member

Hi Pete, you won't be able to do this. Taken from the companies house site:

Can anyone be a company director?

It is up to the members to appoint the people they believe will run the company well on their behalf. The only restrictions that prevent anyone becoming a director are:

* they must not have been disqualified from acting as a company director (unless the court has given them permission to act for a particular company);
* they must not be an undischarged bankrupt (unless they have been given permission by the court to act for a particular company);
* they must not be under the age of 16;

In addition, at least one director must be an individual. Companies who only had corporate directors on or before 6 November 2006 have until 1 October 2010 to appoint such a director.

Pete · Member

Hi
Thanks! I thought I'd read somewhere that for a private ltd co there was no age. Alternatively can I allocate a share holding? or what if my parents were directors? I'm trying to find a way so I can minimise what I am forced to give the csa so that I can ensure it goes to my daughter for her future rather than my ex who doesn't work but lives the good life.

MarkS · Expert

Hi Pete

Not sure if there is an lower age restriction to dividends but expect there would be something meaning your daughter would need to be over 16 or otherwise the income would become that of their guardian.

If your parents are willing the easiest thing would be to issue them shares. Depending on your parents income you may be able to avoid an tax personally for yourself and your parents on the £75k profit if you structure matters properly.

The company will of course be due to pay corporation tax on the taxable profits and and dividends would need to be legally valid ie distributions out of post tax profits.

Regards

Mark

Lumpy · Veteran Member

If the CSA get wind of that fact that you are trying to "hide" some of your income you could have a major problem! The phrase "Hell hath no fury like a woman scorned" springs to mind.

Pete · Member

I know the woman which is why I want to provide for my daughter, legally of course. The woman has already got the house, left me homeless & pennyless. Last resort would be to leave the profits in the company until my daughter is 18 while putting maximum in my pension fund.
Regards

Noola · Senior Member

I'm not sure of the ins and outs of child support but could you not buy the necessary items for your daughter such as food, clothing, toys etc, open a savings account for her and show the receipts and proof to csa explaining that you would rather do this than provide your ex with money for her own personal use? Hope this helps.

Pete · Member

Hi
I already do that unfortunately the CSA don't work like that. My ex wanted the split but I am classed as the non resident father even though we have a shared residency court order. Ex gets all the child benefit I have to pay 15% of my net earnings. As I said I have no objection to supporting my daughter but I have no wish to make my ex rich. This is why I need to minimise my net earnings so I can choose how the money is spent/invested for my daughter.
THanks

semsley · Guru

Don't take this as gospel but I don't think children under 18 can be shareholders, I seem to remember that my children could not have unit trusts in their own names until they were 18, but this may have changed over the years.

Merlion ABS · Senior Member

another thought, she could be an employee? everyone has a personal allowance, but you would need professional advice on that!!

Other than that, if you pay yourself a low salary of say £7000 via a ltd company ( or whatever is the lowest amount before tax and NI, I forget the limits at the moment), then take the rest via loan account, only the salary should be classed as earnings??? Something to think about.

you might have to pay tax on the loan account as it will be classes as a benefit in kind, but whenever the CSA order stops, you can use dividends to lower the loan account overtime from future accounting years.

Not sure how the CSA view Dividends , but if you needed to, then maybe dividends along with the salary might do the trick. Dividends are investment income, but as I say, the CSA may see it differently.

I would definitely seek a more professional view on this though.

another thing is, will this £75k role be for one company or person? if so, a Ltd company may fall foul of IR35...

Pete · Member

It's a self employed sales role for one company althought the contract says I'm not employed and I can do the work when I want and use other peole if I wish. I was thinking of having the ltd company as a consultancy offering several services with the intent on earning commission from referels to selected suppliers. Obviousely there will be one main supplier but hopefully I could get a few others during the year. These hard times you have to get business where you can.

CSA class dividends from being a director as income.

I read about the loan, i think the company have to pay tax at time of drawing if it's over £5k then claim back when paid off. I'm trying to get my head around the options so that I can choose the right accountant.

Lumpy · Veteran Member

It's a self employed sales role for one company althought the contract says I'm not employed and I can do the work when I want and use other peole if I wish.

Would be interesting to know how HMRC see that contract. You may not be employed, do the work when you want and use other people but are you being told what to do by the company? If so then I would have thought that IR35 would certainly apply.

Another thought - could the Ltd Co contribute to a Trust Fund for your daughter?

Pete · Member

They supply with names and addresses and times they are avaiable. I am also at liberty to sorce my own business. I was thinking off having a web site offering an independent home improvement consultancy ie kitchens design, bathroom design & solar energy installation. Who is to say what will be most popular. The fact one is more popular than the others is out of my control. My previouse employment has been in K&B design so it is not unrealistic to go freelance and looking forward I've added solr energy. I have been offered some cad work in bathrooms but not enough to live on.

As for my daughter it may be better to have my parents as majority share holders then I am not in control of the company.
Any thoughts appreciated. Thanks

Merlion ABS · Senior Member

I see how your role would work, but who gets paid for these leads? do you get paid by the customer and then pay part back to the other company, or do they get paid and pay you commission for each successful sale? This could be quite important.

I dont think it matters who is control of the company. The issue is about utilizing the company vehicle best to benefit you and your daughter within the laws of the game! Thats if a Ltd Company is best suited to your situation.

I dont think there is anything stating it is wrong to restrict earnings taken from a privately owned company regardless of the reason.

The first hurdle is the IR35 rules. you need to make sure you dont fall foul and also the company contracting your services is ok with you using a company.

Pete · Member

They would pay the company and I'd receive the commission. I've looked at a list of criteria for IR35 and I didn't answer yes to any of the questions so I presumed I wouldn't qualify. Obviousely it's something to bear in mind when choosing an accountant ie making sure they're hot on ir35. Thanks