Company Director evaded child support

loulou40_2

Hi
My Ex husband is a sole company director whose business has 150k in assets, however he pays himself the minimum wage and no dividends so that he can claim tax credits for himself and therefore only pay £5 per week towards his 2 children.
He lives off drawing down a directors loan in credit that was £130k his father lent him initially. He hasn't paid this back, instead he is doing up his house and currently on holiday in Italy, regularly visits the pub and does as he pleases.
The business is doing well, his family are wealthy land and property owners.
Is this legal?

HappyMJ

Yes....it is legal. It sounds like a family business and the profit can easily be redirected away from him. You will find it difficult to pin it on him. CSA will have little power as well. The best you can do is come to a private agreement or try for a variation based on lifestyle inconsistent with earnings but he can easily say someone else paid for his holiday in Italy and proving he spends all his undeclared cash income down the pub will be almost impossible to prove.

The family being wealthy has nothing really to do with him. It's only his personal income that counts.

RedSky

Maintenance is based on income so anyone living day to day from their savings or a loan may well have a reduced income and maintenance assessment.

clearingout

Yeah. It's legal.

Many of us here struggling with similar. No words of wisdom I'm afraid. Just empathy.

nicky3

if he is the sole director of a company with £150k assets you can apply for a variation on grounds of his assets over £65k. 8% of 150k is deemed his net annual income and he pays his 15 or 20 percent of that.

Can you evidence that the business has 150k of assets? If so do so immediately, they will backdate it to when you made your original claim (thats how it happened for me)

romanempire

nicky3 wrote: »

if he is the sole director of a company with £150k assets you can apply for a variation on grounds of his assets over £65k. 8% of 150k is deemed his net annual income and he pays his 15 or 20 percent of that.

Can you evidence that the business has 150k of assets? If so do so immediately, they will backdate it to when you made your original claim (thats how it happened for me)

What a load of bovine excreta!

For one the assets belong to the company which, in the eyes of the law, is an entirely separate legal entity. The CSA can only apply that variation to personally held assets.

To the OP:-
The only thing to concern yourself about your ex's company is how much salary (if any) he earns as a director and how much dividend income (if any) he gets as a shareholder from the company profits. A company can have substantial assets (plant, machinery, premises) but still make little or no profit especially in the early years.

R.

kevin137

romanempire wrote: »

What a load of bovine excreta!

For one the assets belong to the company which, in the eyes of the law, is an entirely separate legal entity. The CSA can only apply that variation to personally held assets.

To the OP:-
The only thing to concern yourself about your ex's company is how much salary (if any) he earns as a director and how much dividend income (if any) he gets as a shareholder from the company profits. A company can have substantial assets (plant, machinery, premises) but still make little or no profit especially in the early years.

R.

May not be strictly true, it could be very complicated in the very nature of the business in how it is set up...!

IF you are a sole trader, the chances are that you (while still registered for vat) may in fact be just that, The Director of a Company, but in law you are in fact the owner of all the property as a sole trader, this is why there are business laws that protect business such as LIMITED COMPANY, so if he is the sole director of a sole trading company they may well be able to use the assets from the company...

This is one of the ways that self employed people can screw up, as there personally liable for AL legal responsibilities, and it is far simpler for someone self employed to play the system when they are a sole trader than it is as a limited company...

So maybe it IS possible for the company to be liable...

HappyMJ

It's all very confusing but CSA is only applied to "earned" income. i.e Salary and wages only. It doesn't apply to "unearned" income such as interest and dividends. A variation must be applied for to get CSA to use interest and dividends in the calculation......and it's certainly not at 8%. That would be nice to earn but it's nearly impossible. An NRP in a case might have a property empire and the assets might be in the millions but the debt to purchase those properties is all secured mortgages and the profits might only be a few thousand per year. Unrealized capital gains are not counted in CSA calculations.

nicky3

HappyMJ wrote: »

It's all very confusing but CSA is only applied to "earned" income. i.e Salary and wages only. It doesn't apply to "unearned" income such as interest and dividends. A variation must be applied for to get CSA to use interest and dividends in the calculation......and it's certainly not at 8%. That would be nice to earn but it's nearly impossible. An NRP in a case might have a property empire and the assets might be in the millions but the debt to purchase those properties is all secured mortgages and the profits might only be a few thousand per year. Unrealized capital gains are not counted in CSA calculations.

in my variation, all interests charged at 8%, completely impossible to earn, and no taxation taken into account...joke!

yes...any mortgage/loan is taken into account, but assets are assets and as sole director of a company with assets.....that is an asset, and assesed at 8% for income purposes

or it was in my day...2008

nicky3

kevin137 wrote: »

So maybe it IS possible for the company to be liable...

not the company, the director who owns the shareholding in said company

custardy

2 kids and paying £5 a week
disgusting