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Mumsnet has not checked the qualifications of anyone posting here. If you have any legal concerns we suggest you consult a solicitor.

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Mumsnet has not checked the qualifications of anyone posting here. If you have any legal concerns we suggest you consult a solicitor.

Legal matters

Can my husband fire me as a director of his company?

61 replies

Clicketyclack · 09/11/2015 22:35

My husband set up a company yrs ago with myself as a director and employee also.I know nothing much about it all except that (a) he contracts himself out for work in IT (B) he pays me a mediocre salary out of it (c) we are currently thinking of separating and I have accidentally discovered he is planning on sacking me as a company director/employee and starting a company pension for himself.
What does all this mean can anyone tell me and is it ok for him to do this?
Thanks in advance if anyone replies

OP posts:

Report

nameschangerer · 09/11/2015 22:39

Did you do any work for him or was he paying you a low salary so he can take advantage of the tax breaks for himself?

Did you sign a contract? Check the terms of employment.

nameschangerer · 09/11/2015 22:40

You need to speak to a solicitor

Clicketyclack · 09/11/2015 22:40

No never did any work for him...thank you so much for replying

OP posts:

Clicketyclack · 09/11/2015 22:40

There are only two of us in the company..

OP posts:

Clicketyclack · 09/11/2015 22:45

Thanks namechanger ..golly do I really? I happened to see a reminder he had written on a ' to do ' list

OP posts:

wowfudge · 09/11/2015 22:57

Have a look on Companies House Beta Service and check that accounts and annual returns have been filed for the company. If they haven't then as a director you could be fined as not filing accounts is a criminal offence. If the annual returns haven't been filed then Companies House may consider the company defunct and start the process to dissolve it.

Who is/are the shareholder/s? If the company is being run at a loss or isn't making much money then if you are not a shareholder it is likely you do not stand to lose much by being removed as a director. If your husband is the sole or main shareholder, he can remove you as a director whether you like it or not.

As you are an employee you need to check you have been getting the correct salary and it would be worth getting professional advice on this aspect.

ChristinaParsons · 09/11/2015 23:01

If he is the main shareholder then he can close the company and reopen it with a new name. Without you as a director. You will be entitled to any dividends out of the old company. You need to speak to a solicitor asap before he does this

Clicketyclack · 09/11/2015 23:16

Thanks so much to all of you..so helpful

OP posts:

OllyBJolly · 09/11/2015 23:17

Why would he close the company and reopen it?

You will be entitled to any dividends out of the old company Only if she is a shareholder and the board have agreed to pay dividends.

He is probably paying under the income tax threshold as a way of paying less tax - the OP has been benefiting in that she's been getting paid for nothing. Effectively, it's tax avoidance.

OP, if you're separating it's probably sensible to be removed from the company. If not, you would be equally liable if he didn't file company's house documentation or didn't pay the tax bill or whatever.

Morally, you don't really have a claim on the company, but as a separating spouse you may have a claim on the income generated from it.

Clicketyclack · 09/11/2015 23:24

Thanks Olly...feeling a right numpty for taking no notice of any of this now

OP posts:

Clicketyclack · 09/11/2015 23:26

He has filed all the documentation etc this I know...

OP posts:

Clicketyclack · 09/11/2015 23:27

Mumsnet is so wonderful for this sort of thing ...thanks to all of you guys

OP posts:

ChristinaParsons · 09/11/2015 23:27

So that the op would no longer be a shareholder and not entitled to dividends. Any spousal/child maintenance will only be calculated on what he pays himself. Dividends will not be included in his income and he can choose to pay himself minimum wage. Therefore limiting how much maintenance he has to pay. Lawyer. Tomorrow!

Clicketyclack · 09/11/2015 23:35

The thing I am confused about is why he suddenly wants to do this without mentioning it to me? I am a sahm and he gives me a monthly allowance for household stuff which is actually a salary of approx. 12k per annum from the company. Why does he suddenly feel the need to do this? We are at the stage of talking about settlements etc if we were to separate...no proper proceedings have begun yet.

OP posts:

Clicketyclack · 09/11/2015 23:38

Ah Christina...I am getting the bigger picture now...

OP posts:

AcrossthePond55 · 09/11/2015 23:43

we are currently thinking of separating and I have accidentally discovered he is planning on sacking me

We are at the stage of talking about settlements etc if we were to separate...no proper proceedings have begun yet.

Sorry to say this, but I think he is way ahead of you as far as separating goes. Sounds as if he's already decided what he plans to do. You need to see a solicitor ASAP as if he fires you you will lose your only source of income with no plans in place for replacing that income.

OutToGetYou · 09/11/2015 23:51

Also, of he puts a stack of money in a pension, instead if paying himself, that comes off income before Child Maintenance is calculated.

Photocopy the list. See a solicitor. Find as much as you can now and take copies as it seems he may try to hide the money.

flummoxedlummox · 09/11/2015 23:58

And don't take anything he says as gospel from now on.

OllyBJolly · 10/11/2015 01:39

Christina There is a difference between shareholders and directors. The OP says she was a director; doesn't mention being a shareholder.

Most self employed people will pay themselves the tax threshold (around £10k?) and the rest in dividends. The CSA would look at the income of the business in this case. There is scope for some "creativity" and diverting cash into a pension might be one way of hiding income.

OP, I think because you have been effectively an "officer" of the business, you might have a case for spousal maintenance as well as child support.

I think you need to have an open and honest discussion with each other and try to agree how to proceed. Otherwise this could get into a messy case with the only people winning out of it being the lawyers.

Collaborate · 10/11/2015 07:42

As you don't do any work for the company this is nothing more than a tax dodge. If HMRC get wind of it they would recalculate his tax bill and assess him as if the income he paid to you was actually paid to him. Please note this does not include dividends, which you would receive in your capacity as shareholder (if you are one).

He doesn't need to close the company down to start again. The only economic activity the company does is contracting his services. As an individual he would no longer work for the company and set up a new one to work through.

Im0gen · 10/11/2015 07:59

I agree that he is WAY ahead of you on the separation . You need legal and financial advice fast . Agree to nothing and sign nothing . Do not, as a PP suggested , have an open and frank discussion with your DH about it .

I don't mean to be rude, but you clearly don't understand the situation you are in , and he will just be able to BS you .

Make copies of as many documents as you can . Things like your company accounts for the past few years and your and your husbands self assessment forms .

Do you trust the company accountant ? If so, you should speak to him / her and get some facts. As long as they are not in cahoots with your STBX.

While you are still a director , you will be able to access the returns that were made to companies house . Your memorandums and articles of association will say whether or not he can sack you as a director . He can't do anything about your shares, and I assume that you own some - that's the tax advantage of paying you both in dividends and salary rather than just in salary - there's less tax on dividends .

It's possible that all your won income has been dividends , in which case it doesn't matter that you don't work for the company at all .

Lonecatwithkitten · 10/11/2015 08:39

I agree you need legal advice. My ExH was employed by myself and his job title was spouse. My employment law advisors drew up a compromise agreement that removed him from the company paying him a months salary on the basis that when he choose to leave me he resigned his position as 'spouse' in the company. You need good advice as there are ways of doing this.

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babybarrister · 10/11/2015 19:34

This reply has been deleted

Message withdrawn at poster's request.

FreeWorker1 · 10/11/2015 19:40

If you go to the Companies House website you can download all the documents there right back to the formation of the company. It costs £1 per document.

However, if this is a small company it probably will not have lodged a full profit and loss statement but only a balance sheet which is less useful for showing what his and your income from the company was.

dodobookends · 10/11/2015 19:42

Have you actually been getting payslips OP? And have you been paying tax and national insurance on your salary?

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