accounting / tax advice please

A friend is setting up a business and in return for me lending some cash interest free we've agreed that I will get a share of the profits. Question is how do we set this up? Thinking we do a ltd company with both of us as shareholders and then pay out dividends. I'll take my share as income but he wants to leave his share in the business. Issue is that HMRC don't seem to like dividends being waived by one party on a regular basis or SME arrangements with A and B shares with only one class paying dividends.

Don't intend to redistribute any of the waived dividends to me so shouldn't fall foul of any tax avoidance claims though. Probably just need to speak to an accountant but wondering if anyone here has a view before I throw a few hundred quid down the drain?

Cheers.

Posted By: pat_abb, Mar 14, 14:24:48