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Original poster

Angry about CM

82 replies

PeriPipkin82 · 01/05/2023 15:17

My ex & I separated 13 months ago, we weren’t married & have 1 child together. I have asked him to sort maintenance privately which he was fine with & paid £300 a month however it was sporadic so I thought it best to go through official lines so CMS..he is a Director of a a Ltd company & draws down no dividends, wages or shares so now DWP have told me that he can pay zero. I asked DWP to check his Ltd company as he earns a lot of money but because there is no individual tax payment they cannot pursue it as a Ltd company is an individual tax entity so cannot do anything about it. I explained this to him & he said oh well maybe you should have been happy before..can I do anything?

OP posts:
Original poster
PeriPipkin82 · 01/05/2023 15:47

InceyWinceySpidy · 01/05/2023 15:43

OP, listen to what this poster keeps telling you. As a qualified accountant, I can tell you this is correct.

I don't know who's feeding you this "not if there aren't any employees" nonsense. Or why you think you know how it works because you're self employed (a completely different way of operating to a LTD co) but he can not just take money out of the company tax free.

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Ok so once tax is paid/expenses are paid the profit on a business is not yours?

OP posts:
Mortimercat · 01/05/2023 15:46

*after Profit after tax

InceyWinceySpidy · 01/05/2023 15:45

Mortimercat · 01/05/2023 15:44

You aren’t listening.

No this is not ok. Taking money out “after profit” is called paying a dividend. Which then needs to be declared on his personal tax return and tax paid on that.

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Again, correct.

OP you have got zero grasp of how this works, where are you getting your information from?

MadeForThis · 01/05/2023 15:45

The profit belongs to the company, not him. He can't just spend it.

If he takes the money from the company then it must be recorded as salary or dividends.

InceyWinceySpidy · 01/05/2023 15:44

PeriPipkin82 · 01/05/2023 15:41

I’ve spoken to HMRC & if after tax he’s spending profit then that isn’t a problem

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One of two things here.

  1. HMRC are lying to you
  1. You have misunderstood what they told you.
Mortimercat · 01/05/2023 15:44

PeriPipkin82 · 01/05/2023 15:41

I’ve spoken to HMRC & if after tax he’s spending profit then that isn’t a problem

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You aren’t listening.

No this is not ok. Taking money out “after profit” is called paying a dividend. Which then needs to be declared on his personal tax return and tax paid on that.

Hobbes8 · 01/05/2023 15:43

I used to have a limited company. Literally just me doing consultancy, so no business expenses…just income. The only way to take the money out was to pay myself a salary or dividends. You can’t just spend company profit on food and mortgage payments…you have to draw it down.

InceyWinceySpidy · 01/05/2023 15:43

Mortimercat · 01/05/2023 15:34

No it isn’t.

Again, he cannot legally extract money unless it is as a salary, a dividend or a directors loan. The directors loan option would attract a great deal of corporation tax. The number of employees he is is completely irrelevant.

He is cooking the books or just hiding things from you.

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OP, listen to what this poster keeps telling you. As a qualified accountant, I can tell you this is correct.

I don't know who's feeding you this "not if there aren't any employees" nonsense. Or why you think you know how it works because you're self employed (a completely different way of operating to a LTD co) but he can not just take money out of the company tax free.

Original poster
PeriPipkin82 · 01/05/2023 15:42

Dinopawus · 01/05/2023 15:40

I'm next to clueless here, but while the ltd company isn't responsible for paying CM surely your ex DP is?

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Yes of course but he pays tax & the profit is his

OP posts:
Original poster
PeriPipkin82 · 01/05/2023 15:41

Mortimercat · 01/05/2023 15:39

Well if he is taking money out of the company without declaring it as either a salary or dividends or a directors loan, then HMRC are being defrauded and they would definitely be interested.

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I’ve spoken to HMRC & if after tax he’s spending profit then that isn’t a problem

OP posts:
Dinopawus · 01/05/2023 15:40

PeriPipkin82 · 01/05/2023 15:37

TBH I know that DWP aren’t interested as they’ve told me that a Ltd company isn’t responsible for paying CM. I can’t pursue it & HMRC don’t care as long as their tax is paid. It’s so deflating.

I'm next to clueless here, but while the ltd company isn't responsible for paying CM surely your ex DP is?

VeggieSalsa · 01/05/2023 15:40

PeriPipkin82 · 01/05/2023 15:31

Yes it is if you have no employees

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No, it’s not. My job is to advise people how to get paid by their companies. What you’re saying is not a legitimate option, it would need to be either a salary or dividend and reported on his tax return if he is taking money to spend personally and not on the business (or he could be taking a loan, but that has other tax implications so isn’t a long term solution, but would avoid CMS).

Mortimercat · 01/05/2023 15:39

PeriPipkin82 · 01/05/2023 15:37

TBH I know that DWP aren’t interested as they’ve told me that a Ltd company isn’t responsible for paying CM. I can’t pursue it & HMRC don’t care as long as their tax is paid. It’s so deflating.

Well if he is taking money out of the company without declaring it as either a salary or dividends or a directors loan, then HMRC are being defrauded and they would definitely be interested.

BarkyMatherson · 01/05/2023 15:39

I would check with HMRC just in case, because I’ve never heard of anything like tax free income. HMRC would be much more stringent in checking and probably won’t settle for “my girlfriend pays the bills”.

Original poster
PeriPipkin82 · 01/05/2023 15:37

TBH I know that DWP aren’t interested as they’ve told me that a Ltd company isn’t responsible for paying CM. I can’t pursue it & HMRC don’t care as long as their tax is paid. It’s so deflating.

OP posts:
Mortimercat · 01/05/2023 15:34

PeriPipkin82 · 01/05/2023 15:31

Yes it is if you have no employees

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No it isn’t.

Again, he cannot legally extract money unless it is as a salary, a dividend or a directors loan. The directors loan option would attract a great deal of corporation tax. The number of employees he is is completely irrelevant.

He is cooking the books or just hiding things from you.

UnicornsHaveDadsToo · 01/05/2023 15:31

He can't use the company balance to purchase personal stuff or pay rent/mortgage, home utility bills without paying tax, that's illegal. Nothing to do with being a micro entity, all to do with whether it's a personal expense or a genuine business expense. Whatever he's been telling you, it' doesn't sound 100% above board, so it would require an investigation by the HMRC by the sounds of it. Not unusual to be investigated even if everything is completely compliant anyway, so he can't complain too much.

Original poster
PeriPipkin82 · 01/05/2023 15:31

Mortimercat · 01/05/2023 15:30

It isn’t perfectly legal. The only way to take money out of a business legally is by paying a salary, paying dividends or making a directors loan.

The directors loan option would quickly attract a lot of tax and would in a way demonstrate an “income”.

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Yes it is if you have no employees

OP posts:
Original poster
PeriPipkin82 · 01/05/2023 15:30

IncompleteSenten · 01/05/2023 15:26

I believe they can investigate if it appears he has no money but is still living just fine - how is he feeding himself for example?

His GF works so will say it’s from her, I am SE so know how it all works. I wish I had just stuck to his rather sporadic payments

OP posts:
Mortimercat · 01/05/2023 15:30

PeriPipkin82 · 01/05/2023 15:23

He takes his money from the balance after income/expenses. It’s perfectly legal as its a micro entity. I’m just so pissed off about it. A director is not legally obliged to draw down dividends or a salary as they could be be a dormant Director. So frustrating

It isn’t perfectly legal. The only way to take money out of a business legally is by paying a salary, paying dividends or making a directors loan.

The directors loan option would quickly attract a lot of tax and would in a way demonstrate an “income”.

Bamboozleme · 01/05/2023 15:27

But you’re saying it’s deliberately very low?

BarkyMatherson · 01/05/2023 15:27

Im not understanding how he withdraws large amounts of money for personal expenditure tax free?

Directors loan?

Bamboozleme · 01/05/2023 15:27

PeriPipkin82 · 01/05/2023 15:23

He takes his money from the balance after income/expenses. It’s perfectly legal as its a micro entity. I’m just so pissed off about it. A director is not legally obliged to draw down dividends or a salary as they could be be a dormant Director. So frustrating

Yes and the money he is taking is classed as his salary op

Bamboozleme · 01/05/2023 15:26

Frustrating but if all above board - nothing you can do.

In your shoes, I’d plaster on a smile, say I was wrong to do that but the money was incredibly useful for the children.

all the while thinking “you fucking tosspot”

when it comes to my children, pride goes out the window!

IncompleteSenten · 01/05/2023 15:26

I believe they can investigate if it appears he has no money but is still living just fine - how is he feeding himself for example?

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