Selling Inherited Business Shares - Issue

daveshoelace

Premier wrote: »

If someone gave me money I didn't know what it was for, I would ask.

The company doesn't need to specify now what the money was for; they could simply declare it was paid in error and it appears your mother can't prove otherwise. As such she must repay it if the company asks for it back.

She did know what it was for. The money was paid to her as an income, in the same way that my Dad was paid an income. It is just it was done in something of an informal way, partially due to the fact everyone in the company and Mum were grieving at the time.

Sorry for the vagueness of the definitions, but I confirm 100% that Mum was under no uncertainty that the money was given to her as an income - loan never came into it.

daveshoelace

Sorry to go off on a tangent, but if she settled on the £22k or whatever they offered - what sort of tax would she have to pay on it? Is it PAYE or corporation tax?

Premier_2

Mistral001 wrote: »

The money will be accounted for in the books of the firm. All she has to do is look at them. they cannot keep her from looking at them I would have thought. She is a director afterall.

I don't think she is a director, simply a shareholder of the company

As such she certainly has the right to have a copy of the annual accounts (which I believe she has been furnished with) but no right to access to the day to day management accounts

Premier_2

daveshoelace wrote: »

She did know what it was for. The money was paid to her as an income, in the same way that my Dad was paid an income. It is just it was done in something of an informal way, partially due to the fact everyone in the company and Mum were grieving at the time.

Sorry for the vagueness of the definitions, but I confirm 100% that Mum was under no uncertainty that the money was given to her as an income - loan never came into it.

What sort of income?

You dad was a director and so presumably received a salary, payslips. p60s etc.
If you mum thought this was a salary, what proof does she have she was even an employee? (a contract of employment would be great here). Why didn't she question where the accompanying payslips were? How does she know if any tax has been deducted at source without a P60?
She should discuss this £12k annual income with her local tax office and make arrangements to ensure NICs & tax are paid on the income. The company may also be liable to employers NICs (if she can prove they ever employed her)

Premier_2

daveshoelace wrote: »

Sorry to go off on a tangent, but if she settled on the £22k or whatever they offered - what sort of tax would she have to pay on it? Is it PAYE or corporation tax?

It would depend on what value the shares were valued at when they were transferred to your mother, following your fathers death. That would have been the figure given when probate was settled.

Any gain since then would be liable to capital gains tax.

daveshoelace

Premier wrote: »

What sort of income?

You dad was a director and so presumably received a salary, payslips. p60s etc.
If you mum thought this was a salary, what proof does she have she was even an employee? (a contract of employment would be great here). Why didn't she question where the accompanying payslips were? How does she know if any tax has been deducted at source without a P60?
She should discuss this £12k annual income with her local tax office and make arrangements to ensure NICs & tax are paid on the income. The company may also be liable to employers NICs (if she can prove they ever employed her)

No proof she was an employee, I am using the term 'income' for want of a better term.

Dad got paid a regular wage obviously.

He passed away, and obviously as a result Mum was no longer seeing an income for the family coming in any more.

As it was a family business, my Aunt & Uncle wanted to 'look after mum' and started giving her a regular sum of money that would compensate for the loss of income that Dad was bringing to the house. This was never called a loan, and was said to be a temporary measure until they made a firm offer/plan for what to do with the inherited shares.

Now they have finally made this offer after over a year.

In answer to your question on why she didn't ask to see proof of what/why she was being paid. Obviously grief was the main reason, and the fact it was a family business. It was one of those relationships where Dad did everything for her, and in his absense, because she wasn't told otherwise, she trusted that everything was above board because the family were acting like it was. Of course that doesn't make it right, but its an understandable reason.

I am starting to realise that this obviously looks bad for all parties involved.

Mistral001

Premier wrote: »

I don't think she is a director, simply a shareholder of the company

As such she certainly has the right to have a copy of the annual accounts (which I believe she has been furnished with) but no right to access to the day to day management accounts

I see that now. I just assumed that she was a director and that is what she was getting paid for in this wage or "like a wage". In that case the OP's needs to find out in what capacity was his mother being paid.

The firm might actually be acting on legal advice. They might have been told that they cannot pay a shareholder who is not an employee director or supplier and only a shareholder an amount of money for no reason. Atleast a reason which can be put into accounatncy language. There is an obvious compassionate reason as the OP has mentioned. Everything could be above board afterall. They will have to put down in their books what the money is for if they are to do things correctly. Maybe they are struggling to do that.

It is not a wage as the OP's mother is not employed by the firm It probably could not be considered as payment for services as in the case of a self-employed person working for the firm either.

Whether this money should be taken off the amount the shares are bought for, they probably cannot do that. She will have to be paid the going rate for the shares in full.