Asked to be company director for credit rating

zenmaster

Steel wrote: »

So, if hubby is a director from say middle of October to beginning of January, and plays no further role in the company, would he still be liable if his relation does not file any tax returns in the future after hubby has stepped down?

Or is he liable only for whatever happens for the duration of the time he is a director?

I can't see this happening, as the relation has always filed a return for all of his business as they've been due and he is very committed to being successfully self-employed. He needs to be - he doesn't want a job and has debts to pay off. Plus the fact he loves what he does - it's his hobby as well as his business.

But I guess you never know.

No. Just the time he is a director.

Your relation sounds a lot more reliable than my friend but do be warned that your husband would be responsible for anything that happened on his watch.

Some information here.

chalkie99

I have read this through a few times since you first posted and keep coming back to the same thoughts.

Steel wrote: »

This relation's business is solvent and trading well, has for the last 18 months. There are no staff and he takes a wage. It has no overdraft, no loans and turns over a reasonable amount of money each month and is always in profit. However, recently the service he uses to accept credit payments from customers has been taking 10 days or more to clear their payments and they are getting annoyed. As a result, he has lost future business as some of his repeat customers have customer orders of their own they are trying to fulfil and are now going elsewhere. He recently had a £10k order he couldn't accept as they wanted to pay by credit card and pick up the order pretty much immediately.

This relation has appalling personal credit which he has been trying to come back from. His house is in negative equity. He closed down a business a few years ago which was doing well until a licensing law was passed that made it financially impossible for small businesses to continue trading and he had to give it up. A second business with a partner was doing well but the partner lost interest and it needed two of them to make it work – it’s still there but not trading. He was also taken to the cleaners by a someone who got him to sign over some intellectual property and he got nothing for it and had to start again. Then his spouse became ill long term and their income dropped dramatically. All the time he was taken out loans and using cards to try and keep the household bills paid. He has been quite naive in the past and paid for it.

I know you say he is a close relation but there is a thread "sticky" at the top of the loans section about getting involved with friends and family which has some real horror stories.

The thing which I keep coming back to is that everything in the first paragraph above smacks of information which you have been fed, positive things which someone might like you to believe but cannot actually know for certain, whilst the second paragraph seems to be things which you actually know to be true.

And then......

Steel wrote: »

The branch manager took him to one side and told him the way to get round this was to ask someone with a good credit rating to take over as company director for a few months, apply for the credit management facilities and then when accepted and everything is up and running change the directorship back.

This "temporary arrangement" sounds tantamount to fraud and you can be sure the branch manager will deny all knowledge if and when things go wrong. Actually I would go as far to say it is fraud.

Personally, I would come up with any story to ensure I did not get involved.

Annisele

chalkie99 wrote: »

Personally, I would come up with any story to ensure I did not get involved.

Me too - that's why I was going down the "does OH's husband's employment contract allow this". My employment contract allows me to act as director only with permission from my employer. I'm fairly certain I could ensure permission was denied if it suited me.

I can see why the OP wants to help the relative, but I also think that if the relative's business was going as well as he says he'd be able to find somebody else to put the money up.

Errata

TBH if the relatives business was as thriving as they say it is, they wouldn't need a pseudo director for a couple of months.

paulwf

Something about this doesn't seem quite right. I'm not sure quite what it is OP, maybe I'm just naturally suspicious!

What doesn't ring true is the £10K on credit card. The companies involved should be able to sort out an instant BACS payment between themselves when dealing with that sort of money. I can't remember even spending over a few hundred on my company credit card but have maxxed out my daily transfer limit of £10K by BACS more than once. Taking such large quantities on card via a website is risky because of "cardholder not present" chargebacks.

OP if it was me I'd leave the person involved to sort out their own solution to running their company (if their credit rating is poor they should have resolved this before relying on it). You have nothing to gain by getting involved but everything to lose, why give yourself the hassle?

Steel_2

Right, I've reported back to hubby the thoughts of everyone here, adding mine in as well which is:

I think it's fraudulent.

If the sh*t hit the fan and the bank found out hubby could be prosecuted along with close relation for obtaining credit management services by deception.

But ultimately, the decision is is. I cannot force him and I won't scream the place down and make his life unpleasant if he decides to. I have told him that he is to sign nothing until we've taken legal advice on it, and that nothing is to ever be secured against our property. I am also not happy with him being a personal guarantor for anything, and reminded him that if he goes down, I go down too because our finances are linked.

greyteam1959

Don't touch the idea with a barge pole.........& a very very long one at that.