Marriage and finances

[LadyHalesBroach]

I have a wonderful DP, he's the best daddy to our little girl. We've been together for about 8 years and are getting married next summer.

I don't have anyone in real life to ask this of, and I suppose I'm too scared to ask it out loud because I already know the answer: don't do it, you're fucking bonkers if you do.

DP is self employed, or rather 'perma-lance' because he has a recurring monthly salary. It's not unusual in our line of work to do this, and I think it also saves his employer paying NI etc too. All very dodgy I guess, and I don't agree with it (I used to be self employed and paid my taxes through SA, and am now PAYE).

We want to buy a house soon. My mum died suddenly six months ago and I have just inherited about £120k, which is sitting in a savings account until I know what to do with it. I'm very grateful for it, and would give it straight back if it meant my mum was alive.

My question to the great MN collective is -

a) it's going to be impossible to get a mortgage right? Because he has no proof of income, no tax returns etc.
b) even worse - how the fuck does he get out of this hole? Pay it in instalments? Bankruptcy?
c) If I marry him, am I liable for his debt too? Or would HMRC look at the property we hypothetically now own and take that back.

I need to sit him down and have a frank discussion with him, but he buries his head in the sand and gets stressed and upset, but he must know this is a huge issue.

Oh dear, what a mess. Honestly, I would not be marrying him, I would never combine finances with him, and I would NEVER buy a home with him. Buy a house in your name ONLY. You need to protect your financial future. Not being able to have a discussion about money without him becoming upset is a very, very massive red flag.

He buries his head in the sand and gets stressed and upset because he doesn't want to face up to it being a serious problem.

Don't combine finances with him and don't buy with him until he sorts this out. Long term being off books means no sickness pay, no pension, no employment protection: not such a 'best daddy' approach to life.

How did he ever think he was going to get a mortgage without doing it properly? Was he just waiting for someone to come along? Has he never thought it through?

I would marry with a prenup, if his serious about your future together, he would do it properly...otherwise how are you ever going to better yourselves? Or does he plan for you to buy a house and never have to move again? Or show income?

He can’t be bothered by the sounds of it and whilst I acknowledge you saying his a good dad....not financially though a?

Thanks everyone. Any ideas on what practical steps I can do to get us/him out of this mess? Speak to a financial advisor in the first instance?!

Any ideas on what practical steps I can do to get us/him out of this mess?

I'm sorry, op, but this made me cringe. Why are you asking what YOU can do? This is HIS MESS. Why on earth are you willing to take on the role of mummy and deal with his shocking lack of maturity and gross irresponsibility? If he is not adult enough to sort this mess out himself, I very strongly suggest you rethink this impending marriage, or you will find yourself in a financial nightmare that will never end.

What exactly do you mean with "permanent-lance". Is he being paid cash in hand, or is he being paid as self employed/ltd company when he should be inside IR35? Without knowing it is difficult to advise but what I would agree with is do NOT combine finances and do not put his name in anything. Frankly he may be wonderful but until you sort this out I would hold off in marriage.

However his debts are not yours, but your assets could become his and vulnerable to creditors if he has his name in anything.

thanks Marie - yes I mean he should be within IR35, he has been employed by this company for years but once a month he invoices them for a set amount and they pay it into his account.

To be honest the company is a ticking time bomb - they pay all their staff like that, and I know for a fact that a few of DP's colleagues are in a worse place than him. Fuck knows how they get away with it.

I have a decent salary and now this cash sitting in my account. I guess I could get the house myself etc, but that doesn't solve the problem of how he gets out of this mess he is in.

But that's great advice, to keep everything in my name at least.

The way he gets paid is something I would really worry about. It sounds like he doesn't even pay any tax. This is the sort of thing that HMRC are cracking down on.

If it's well known that the industry he's in often works this way the chance of his employer being investigated is high and then they'll also investigate all their 'employees' and the invoices and bank account payments are there for all to see and he could be hit with back taxes and fines for tax evasion. Even prison if the amount is high and it's over many years.

Does he spend all his money so wouldn't be able to pay a tax bill if he got one? What about National Insurance? If he's off the radar he won't be earning credits towards his pension so what does he plan to do then?

I really wouldn't be marrying him or combining finances with him and I'm not sure I could be in a relationship with someone who's dishonesty is restricting normal life like that - unable to buy a property, no pension etc.

Does it look like your inheritence and salary would buy a suitable house on your finances along?

Is there any chance he could get a job in his industry with an employer who does things properly? Does anyone at his current employers pay taxes? They can't all be fiddling their taxes?

@LadyHalesBroach ok so not as bad as it first appeared. He isn't involved in tax evasions per se.

How big is e company? If over a certain size, as from next April the responsibility to asses IR35 liability will be the responsibility of the company anyway. My understanding is the liability will be theirs as well so the issue may get forced

To be honest HMRC are not tending to investigate small Contractors as in essence they are still drawing the money out and laying tax, it is the NI costs avoided.

There is a CEST tool online which you can use to assess whether he should be inside IR35 but this has been heavily criticised as many those it shows as needing to be in IR35 are in fact not when challenged at tribunal. In any event, your husband will still have limited company accounts so from a finance point of view he is legitimate.

He needs some advice on this but I think (not certain) if there is a back tax demand, it is for his LTD company to pay. I presume that would put it into liquidation but not mean it is a personal tax demand?

You can lay £100 or so and have his contract assessed by an IR35 specialist. I would suggest you do rather than live with the fear

Do you mean to say he hasn't completed a tax return to declare this self employment income?

How long has he been working at his current workplace?
There are a few problems but they can be resolved.
Find an accountant and get professional help. He will need to file a tax return for the past years to declare the income and pay the fine plus taxes.

The other issue is that he's not self employed. He's an actual employee and should be on PAYE instead. The issue with this is the NIC and he could be fined.

See an accountant to resolve this as it's better to come forward himself than waiting for the revenue to catch him as that means the penalties are lower.

MarieG10, where did you get that the OP's partner have a LTD company?

Just tell him to become an employee of another firm. Job done

OP has your DP paid any tax?

My DP also invoices his company but then completes a SATR and they state how much tax is owed. He puts aside each month what he believes the tax bill will be.

I think some mortgage companies may use the invoices as proof of salary but generally they'd ask for a P60. If he hasn't been paying tax then the P60 won't show much and surely that definitely is tax evasion!!

Thanks everyone. I'm probably not making myself clear. I know it doesn't sound like tax evasion, but I honestly think it is (call a spade a spade) because he chooses not to put money to one side every month and he chooses not to file a SA every year.

I'm going to speak to an accountant and sit him down in front of one. I honestly don't know how he sleeps at night, I'm starting not to.

And I think he really, really needs to leave his current 'employer'. There are plenty of employers in our industry that do it right, but it is common for this sort of thing to be happening.

But then yes, as some of you have rightly pointed out, there is a morality issue here too.

If he's self employed then they would ask for a SA302, if employee then P60 or payslips.

How long has he worked at this place? Your NIC preserves your pension so if he hasn't paid any NIC for some years then he has lost some eligible years. There would be a gap.
Your other problem is he can't get a mortgage with you as he cannot prove this income. It's basically cash in hand.
A mortgage company will ask for his bank statements along with the SA302, so you got a problem there. Hold tight on your plans and resolve this first before doing anything.

HMRc will not take ignorance as an excuse, especially as he has been invoicing the company, this shows he has been aware that he has been responsible for his own Tax and NI. He needs an accountant and sharpish.

@Privacynoticeallthetime The op confirmed about it being outside IR35. That is relevant to limited companies where the owner or part owner is the contractor and is sometimes seen as a way to avoid being taxed directly as an employee. IR35 isn't relevant to self employed, e those not working through a limited company

But she didn’t confirm that he’s operating via a ltd company. So cannot assume that.

And also if he does have a ltd company then he still needs to complete a tax return as the payment he receives is considered a deemed payment so he needs to pay NI as an employee on it.

Sorry I'm not entirely confident with all the terms. He doesn't operate via a ltd company (I don't think?!)

He's just self employed, working as if he was fully employed. He gets a monthly amount of money per month on the same day every month, but instead of putting half of it away, he doesn't.

His 'employer' is a totally different matter and I'd go so far as to call them corrupt because they employ all their staff in this manner. No one there is PAYE (apart from the receptionist, I think). Fuck knows how they've gotten away with it.

ok, this has given me a lot to think about and it does feel better to get it off my chest. I'm going to drag DP to an accountant. And I'll go to a family lawyer to see what I'm liable for.

You aren’t liable to anything he’s doing. You need to go to an accountant and sort it out. It’s not the end of the world so don’t stress. He just have to pay the taxes NI fines and report his employer. His employer has made this set up to avoid paying the employers NI and can get shut down for it which they should.

Yes I totally agree they absolutely should get shut down, I'm in half a mind to put in an anonymous call to HMRC but that seems a bit over dramatic. I'm just worried they're gonna come after the years of backpay NI and tax, he just can't afford to pay what he owes. Which I guess is called bankruptcy.

How long has he been working there and how much does he roughly earn? When he declares the income he will have to back pay but doesn’t mean he will have to go bankrupt as he can make a payment plan with them.
You should report them! Is it still 5% that someone gets for reporting someone and on the successful conviction or whatever it’s called of the taxes owed etc