Tax and "benefits in kind"

Slow_Fuse

My husband works for his family business (a shop). He earns under £200 a week before tax, works over 40 hours a week, and we get tax credits.
We stay in a flat which is owned by his mum above the shop and the shop pays for the gas, electricity and council tax on the house. Originally this was done years ago when his mum lived in the house, and it's not changed since.
Now, I never really thought about the shop paying for the utilities in relation to our tax, but his mum, in a fit of temper yesterday, flung it at us that we should be careful "they" don't find out about my husband's "benefits in kind" meaning the utilities. I don't know whether she meant income tax, or tax credits or whomsoever as the argument moved on, but I am now worrying that we may be in a potentially fraudulent situation.
I'm posting this in Tax forum, but I'm going to ask something similar in the tax credit forum, as I want to know from both perspectives.
Can anyone help with some clarification.

fengirl_2

The bills which the shop pays for the flat are indeed benefits in kind as would also be the value of the flat itself if the shop pays the rent on it, or provides it rent free.
Whilst its the employer's responsibility to make returns of benefits in kind on a form P11d annually, it's also up to the employee to declare income which has not suffered tax and which he believes to be atxable (ignorance of the law is no excuse). Failure to do so on either side gives rise to penalties and interest on tax paid late.
There is also an issue over the NMW - if he is earning only £200 for a 40 hr week.
It therefore appears that you are both potentially in trouble.

Rolo_Tomasi

When you say your husband 'works for the family business' is this as an employee under PAYE or is he classed as a partner? Also what does the business do as there are some businesses where it is necessary for employees to live on the premises and therefore no benefit applies.