Richard Curtis points out that family companies have many advantages but warns that unexpected liabilities can arise for the unwary.
An individual may form a limited company to carry on their business – or indeed to hold assets (e.g., a property portfolio). The shares in the company may be held by the individual or individuals who are actively involved in running the business, whether trading or investment.
However, shares (perhaps minority shareholdings) may also be held by other family members, perhaps a spouse, civil partner or children. The shares may yield dividend income, and this is an area where unexpected tax issues can arise.
Settlements
A potential problem when shares are given to relatives and dependents is whether the anti-avoidance settlements regime (in ITTOIA 2005) will apply. HMRC states: ‘The settlements legislation is
