Terms & Conditions

[Anonymous]

Hi

I have searched these forums for an answer on how to assess a director’s capital interest in the company, but there is a lot of conflicting information reg directors and I’m finding it difficult to come to a conclusive decision. We have a company director who is the owner of a limited company, his wife is the company secretary, he has provided company accounts and I have determined his earnings. However his balance sheet for the end of year April 2011 shows shareholders funds of £20,820. The HB guide advises to treat his interest in the company as capital, however going through some of the posts on the forum it has been advised that under HB reg 49(5) that we can disregard this capital as long as the claimant continues to work for the company, is this correct? if so why does the HB guide advise us to assess the capital?

Many Thanks
Riz

[Anonymous]

It depends on the scale of the company. See Peter Barker’s posts on the hypothetical “ladder and bucket” trader. Reg 49(5) is more suited to small-scale ladder and bucket companies, rather than large businesses with substantial assets. Also: reg 49(5) is discretionary.

Caselaw request – capital value of limited company

[Anonymous]

Thanks Michael, any chance you have the FTT decision you mentioned in the link, if so please could you email me it or point me to a link to it.

Cheers
Riz

[Anonymous]

Nope, sorry. I’ve moved to another Council recently so no longer have access to the paperwork. It wouldn’t have been published as it was only first-tier and in any case it would not be binding on other tribunals.

[Author]

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