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?

Xpost !

Being a director of the company as his wife is perfectly legal and many businesses do this.

It seems as though you're having a bit of a witch hunt against this couple so might be better if you looked at the reasons behind why you'd want to report them.

Here you go Lucy. This is a guide to efficient tax management.

www.1stformations.co.uk/blog/how-to-take-money-out-of-a-limited-company/

Might I suggest as well that if you wish to receive similar such benefits that you take the risks involved in setting up your own limited company.

I think reporting someone for tax evasion when you do really know anything about the set up or how it's works, is a really shitty thing to do.

I draw a wage from our company and am rarely in the office. Dh is there today I am not. I generally work from home. I also travel and do the same work when I am away. Dh couldn't do it all and his own job. Besides which, the company was actually my idea and set up by me. Me drawing a wage has nothing to do with tax evasion. It's to do with me taking a wage for the work I do. Like employed people do.

Today I will catch up on emails, take the kids out and do some work this afternoon and tonight when they are in bed. I can't see what's wrong with that.

Don't worry Lucy, I'm sure you're disappointed you can't catch them out for this, but I'm sure you'll be able to drop them in it for something else. You really do sound that you're very bitter towards them. Let it go.

Sorry OP but dont you know that "Tax avoidance" is perfectly acceptable, until it means someone uses the same system to avoid child maintenance at that point they become scum!

If you're an employee it's up to the company how much work you do for how much money.

It's perfectly legal to employ a crap employee who does as little work as possible. If a company want to employ someone for doing nothing, they can.

It's not illegal.

You could well trigger an investigaton by hmrc and bring the whole company down- they have to pay for the forensic accountants and other investigative staff, it can cost them 10's of thousands.

I am in a similar situation- i do work for the company, but at home to my own hours around the kids. Lots of people assume i'm a sahm, including my own mother. If anyone reported us and we were investigated it would bankrupt us completely.

You have no idea what you're talking about. None.

There's a saying...

It's better to remain silent and appear stupid, than open your mouth & confirm it.

Unless you have access to their accounts and concrete evidence of your suspicions, I'd keep your sticky beak out.
Makes you look quite vindictive.

You can check Companies house to see if she is a director and/or shareholder; if she is, she doesn't really have to do very much at all to be paid as she is an owner.

If she is called a director as a job title but isn't registered at companies house she must carry out duties of an employee. If she isn't and this is a lie, this IS evasion NOT tax planning, although it is an area that's abused. It can be an 'easy win' for an inspector on an enquiry. They are dreadfully understaffed though and ime largely under trained so they may not do anything even if you report. Don't forget, she may be able to carry out her role legitimately working from home so no need to be based in the uk to do it.

Hmrc have an online reporting portal or you can call anonymously so no need to give your name if you want to say your piece and move on. Lots of people and business do for lots of different reasons. You won't find out if your information led to an assessment though.

Since when has it become illegal to take a wage (tax paid) which you haven't done an honest day's work to deserve? Most family owned companies employ family members as part of a legitimate scheme to minimise tax.
With a government dominated by businessmen do you expect the rules would be any different?

The wife could be doing admin/other roles working remotely.

It's standard to have a wife or other partner on the payroll to use up their income tax allowance - eg instead of the husband earning £50k pa and paying up to 40% income tax, he earns £40k and pays up to 20% tax and she earns £10k which she pays no tax on, if that's her only income.

If the main earner earns more, they could also use this sort of thing to get round the child benefit rules if relevant.

All businesses that employ accountants use the tax rules to minimise the amount of tax they pay. There is avoidance and evasion and only the latter is illegal. There are however, some aspects of avoidance that are stretching the rules to the limit and are usually not in the spirit of the rules - HMRC are cracking down on these and I think there are/will be limits on dividends and similar things now.

Almost every response telling OP she is BU for considering reporting a middle class family for tax evasion. Interestingly, a similar thread about someone accepting cash in hand (a more working class family) garnered the very opposite response from almost every poster.

I don't think you should report them, OP, but that's because I think other people's tax arrangements are rarely any of our business. However, if you look into this and turns out that a Director does have to be involved in some way, shape or form and you genuinely believe she isn't, the question is, would you report someone for benefit fraud or accepting cash in hand? If the answer is yes, don't make an exception for this couple. If the answer is no, don't persecute them for personal reasons.

Op people like you really wind me up.

Last year I was reported for having a second job. All because I said to a friend I couldn't make breakfast as I had johns house to clean and to do his shopping. Now John is my FIL who is disabled. She thought I was doing a second job and that caused my tax credits to stop.

She is no longer a friend.

This country is messed up. If I was to go out and steal from a shop then I would be innocent until proven guilty but not when it comes to HMRC

I am a director for a small company, as is my dh. It's not our family business however. But we are directors and we are listed as such. We do not have anything to do with the day to day running of the business at all. We don't take any part in that. We just go to a meeting 2-3 times a year to discuss things.

You don't have to work at the business to be a director.

Nasty.

I very much doubt they are breaking any laws. The accounts I presume will have been done by an accountant who will have advised them if that were the case. It is perfectly legal for somebody to be a company director without have much to do with the day to day business of the organisation.

Trifle accepting cash in hand IS (or can be if not declared) tax evasion! A completely different thing!

You could end up making yourself look very stupid because this sounds totally legal.

As others have said you don't know enough, sticking your nose in is just a bad idea.

TBF I read the thread and thought you were talking about Phillip Green!

Dolly: I know. I am not advising the OP differently, just suggesting she considers her attitude to them in the broader context and gets her facts straight. If she believes what she is seeing is tax evasion, she has a decision to make.

Sorry trifle, it seemed you were saying that tax avoidance or efficiency by this couple was being treated more kindly than 'working class' cash in hand so was therefore discrimination against working class. I misunderstood your post.

Dolly, I do believe people tend to be more defensive about middle class tax arrangements and more condemnatory about working class tax arrangements, yes, but no, I am not saying this is tax evasion. I don't know whether it is or not.

Oh and another thing OP, company directors have to fill in self assessment tax returns too for HMRC.

Do you file a tax return?

If I were you, I would look at the reason you want them to get into trouble? I highly doubt it is for the good of the country. Take a deep breath and let it go. Focus on positive things in your own life.

Come on, YABU. Loads of people do this.

Honestly I think tax evasion is more of an issue for the nation in relation to folks like the Duke of Westminster