In practice you may wish A N Other to be a shareholder e.g. spouse. If A N Other is not a higher rate tax payer there could be benefits of paying them dividends instead of these dividends being taken by you.

You should be aware, however, that there is a risk associated with paying dividends to the individuals who do not provide any services to the company since HM Revenue & Customs may consider such dividends come under the Section 660 settlements legislation.

If you are considering making someone else a shareholder then please contact us for advice.

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