CMS ex is company director but NMW

[SneakySnakeEx]

Hi after advice.
Ex runs his own company with his wife. Both directors. Both recieve PAYE wage (40k each) and 5k dividends each

However he's told me he's ' sick of having to pay out' so hes going to take bare minimum PAYE of £12k PA. Take the usual 5k dividends, so totally income 17k pa instead of 45k.

But pay his wife extra divendends to the value of the difference in his old PAYE to new PAYE ( so approx 28k dividends to wife plus her usual 5k)

How can he even be allowed to get away with it? Makes me so angry.
CMS have said he can ae they are both directors so can use the businesses money how they see fit.

You will need to apply to the CMS for a variation based on diversion of income.

Have you applied for a mandatory reconsideration through CMS? (You get 30 days to do so). Failing this because CMS are of no help... you will apply on the GOV website and apply tod the courts. Forgot the exact name but you can challenge ex earnings I'm in the same process myself currently awaiting a court date. Ex earnings funnily enough have shot up... but I am still going ahead with court. Courts have powers to check bank statements if needs be.

It’s diversion of income but CMS are terrible and won’t do what they’re meant to. You have to call everyday, and involve your MP.

Thank you. Is it diversion though as his wife is a director.
I'm sure they have a joint bank account as i know when I've had to transfer money once, i had to put both names on the transfer details?

Its just so frustrating, i shouldn't have to chase for him to support his dc!

Yes, it is diversion. The fact his wife is a director is irrelevant.

It is literally the definition of diversion of income. He is diverting it to a partner so it appears that he doesn’t earn as much.

Yes, as joint directors they can do what they like from a business perspective but it is a clear cut diversion of income to ensure his earnings appear less whilst they continue to bring in the same amount. But you have to really push CMS.

Thank you. That's great. I'll call them again Monday.
Although he threatened if i ' ruffled feathers' he would step down as director and just take NMW as PAYE only.
Makes me so angry he doesn't want to support dc

That wouldn't change anything. It would still be diversion of income.

Not the point of the post I know but it’s also a breach of company law. You can’t just pay one shareholder more dividends than the other - the dividend is declared per share - unless there are specific structures in place such as different share classes. Which I bet don’t exist in this case. I’d be notifying HMRC too.

Application for variation comes before a mandatory reconsideration request.

Thank you again. Im sure hmrc don't know to be honest.

Is he a shareholder of the business?

Sorry but this is nonsense. it takes about 2 minutes to change share class rights and nothing illegal about it.

Yes both shareholders, i dont know if equal or what as I don't fully understand how all that sort of things work.

Following this as in same position

He will have changed the shareholding on his company to do this as if you re equal directors with mostly equal shares (usual to have 49% one and 51% the other) you have to set up a different share type. All of this can be seen on companies house website as public viewing.

I would speak to CMS and see what they say but as others have said what is supposed to happen vs what actually does is very different. They are rubbish at sorting anyone out that doesn't just pay. The amount of debt by one parent to another is astonishingly high.