WIBU to shop someone for tax evasion?

[LucyBgood]

I have no idea how to go about informing HMRC about possible tax evasion, but it makes me angry to think there's a family getting away with not paying their taxes when the rest of us have to do it.

Bit of background. He owns a business which was inherited from his father (I'll call him John for the purposes of this thread). His wife is on his payroll as a 'Director'. However, I know that she has very little to do with running the business as she spends most of the year abroad. I happened to read somewhere that having a spouse on your payroll, taking a salary when they don't actually do anything, is a way to evade tax. I know this probably happens all the time, but that doesn't make what they're doing right, it's a serious offence! I dont know how much money the company makes a year, but it must be a lot. Should I just leave it alone or report it? How do I report it? What if I'm wrong?

I'd leave that one as its a grey area and I don't think will fall under tax evasion. Firstly are you sure she's getting a salary and not just dividends which is perfectly legal?

You can report to hmrc

However, I think you're wrong about the rules about wife directorships. Philip greens wife is a director of the company, lives in Monaco so she pays no tax, and doesn't work for the company.

And he's been knighted.

I'm pretty sure you can be a Director without having anything to do with the day to day business.

I think it would come under legal tax avoidance, rather than tax evasion.

Leave it alone because as you said you could be wrong.

Based on what you've said it could be completely legal - they will almost certainly be putting her salary through payroll so she's paying all her income taxes, the only question is whether they're claiming her salary as a deductible business expense. I think it's far too much of a stretch to assume that they definitely are from what you've said. I wouldn't report this, and I'm an accountant who has previously reported sole traders (not my clients!!) for suspected tax evasion.

Directors don't have to have any rule running the day to day business, she could officially be in an advisory role, attending any board meetings, holding those officially 2/3 times a year would do that.

this is legal tax minimising by making use of tax allowances, and not evasion. It's incredibly common. Directors do not have to be executives of the company. YOu sound a little over invested in othe r people's arrangements

Oh and it's more likely they have directors so they can be a limited company, not a sole trader. They are probably both receiving a low wage plus dividends from shares, which I believe they will pay income tax on but not national insurance.

I might leave it alone for now as I don't know enough. All I know is rich business owners usually have very clever accountants. Perhaps one day he will get found out without my intervention.

I don't think what you have described is tax evasion.

You'll have to dream up another totally spurious reason to get at the person you don't like.

Lucy you sound bitter and i think you really need to be careful making assumptions about successful businesses.

There's always one of two people who have to give a useless opinion instead of actual advice.

No but you do actually sound quite bitchy OP :s do you have something against this couple

'Perhaps one day he will get found out with my intervention' sounds really catty

I already gave you advice above.

And being careful about making assumptions IS good advice.

There's always one bitter person who has to stick their nose in someone else's business.

Agree with others. I think this is tax avoidance (so legal within current tax regulations), as opposed to evasion (illegal).

There is nothing illegal about this, it is a standard and usual practice for a spouse to be on a payroll to make the most of their personal allowances.

You can report it, they won't do anything, almost every company does it.

OP you've posted on AIBU, where people offer opinions as to whether we think you're being unreasonable.

There's been several posters who have already offered you constructive advice.

You sound as though you have a bit of a chip on your shoulder. And also lack basic accounting knowledge.

If it's a limited company, which it sounds like, don't forget that taxes will be paid in the form of corporation tax.

You could look up their returns on line.

I don't think they're legally doing anything wrong OP. I'd leave well alone

What you've described sounds like tax efficiency, not tax evasion or avoidance. Perfectly legal, very common and you don't have to be a rich businessman to take advantage of it. Clever accountants still have to work within the boundaries of the law.
You might want to keep your nose out of other people's business and concentrate on your own.

They may well be being tax efficient not evading tax. You have no actual hard evidence.

And why would being abroad mean she wasn't doing a y work for the company?