Ex hiding dividends from CMS

[Dividendsquery]

Just looking for advice from anyone who has been through the system, my ex is a company director and I think his wife may be as well (in name only, he is very highly qualified and she isn’t, if they are doing this, it will be for tax reasons).
CMS tell me he only earns about 12 K per annum which is the directors minimum, most company directors would then also draw dividends. He has never declared any to CMS. despite being fabulously wealthy (massive house in London, new car, always off on nice holidays et cetera ) pays me a low amount of maintenance for our son, although it is more than CMS tell him to pay.
I suspect the reason he does this is because it will make me anxious about querying it in case I get it wrong, in which case he will drop down to the absolute minimum. If this is the case it has worked, he was financial abusive in our relationship and I am scared to rock the boat. I am also dealing with serious health issues at the moment and teen son has SEN and needs a lot from me.
however, because of my health we are living hand to mouth at the moment, and if he owes my son more money, I think we should get it. Am I right that maintenance runs until our son leaves full-time education, and that if ex has been hiding income or not taking dividends he is entitled to as a way of hiding income then I could potentially flag this with them, for example 3 months before maintenance is due to stop, and then if they find in my favour that he would be told to pay backdated maintenance? I know the system doesn’t work well, but I do think if they told him to pay it, he probably would.

my thought is that if I wait until relatively close to, when maintenance is going to stop anyway, if I have got this wrong, my ex wont be able to punitively withold these “extra” pounds he gives us for more than a few months, but if I’m right, there will still be time for CMS to tell him that he owes me backdated payments.

also, is there any other professional body I could get involved to help me with this, I don’t think it’s something you can involve a solicitor with?

Sorry you’re in this position OP but honestly there are too many unknowns here to be able to advise properly.

If he is taking legitimate dividends then HMRC would be aware of that and so they would be factored in for CMS purposes. Directors tend to take dividends rather than a higher salary because dividends are taxed more favourably but they ARE still taxed, it’s not hidden income, HMRC and therefore CMS can access that info when calculating what he owes.

He does not HAVE to take dividends, it is not compulsory, even if the funds are there, company doing well and so he could take dividends, he absolutely does not have to. There is no “if he’s choosing not to take them to hide income”, if he’s choosing not to take them then he isn’t hiding income, he actually isn’t taking an income, and he’s perfectly within his legal right to do that.

If I were a betting woman I’d be pretty confident that what he has done is set his wife up the way he has so that SHE can take dividends, all legitimately, and that funds the holidays/house/cars etc, but because she is not the parent of your shared child her income is entirely irrelevant for CMS purposes so there is nothing you can do about that. She can take whatever dividends she wants and won’t increase what you are owed for your son a single penny- but it will mean they can live the lifestyle they do.

You can report him to CMS if you want to, if you have evidence, and ask them to investigate, they may but it will be slow, but I’m not sure what proof you’d have here really. Unless you’re actually accusing him of out & out fraud, taking money illegally from the company and hiding that from HMRC, in which case it would need to be flagged to HMRC and investigated fully, him choosing not to take dividends isn’t a crime or something he can be punished for.

Can’t you report him for lifestyle incompatible with salary or something like that ?

OP could but it likely wouldn’t amount to much. He’s married and so it’s quite possible, and legal, that all of these things are paid for by her from HER salary. While unfair, that doesn’t legally make OP entitled to anything else.

To set it up so only his wife can take dividends, then he would have to resign as director, and be a PAYE employee.

if he isn’t a director, then minimum wage applies, so he wouldn’t be able to pay himself the 12k directors salary. She would also have complete control over the company and all money and decision making is hers, which would be a risky plan for him.

it’s easy to check on companies house who holds what roles.

all directors must be paid the same dividends. Yes if he’s put her as a director too then he halves his dividend, but he cannot pay her and not pay himself an equal dividend.

as pp have said dividends are taxed and declarable. So HMRC will know. It should show in his accounts, again available on companies house.

if you think he’s taking money from the company without reporting it in his annual accounts then report it.

a ltd company is harder to hide money than you think.

I had sympathy with you until you came out with your idea about waiting until it is due to stop and then claiming to try and get a lump sum of back pay. Considering he pay you more that CMS says he has to, thats you screwing him over, not the other way around. He is responsible for his son, not you, regardless of your health.

Oh and while you think she may be a director “in name only” you don’t know that is the case.

i am a director for Dh’s company. I am not remotely qualified in the field. However I do all invoicing, booking appointments, yearly tax returns, payroll, making sure suppliers get paid, pensions get paid, HMRC gets it’s tax and Ni, etc etc.

dh also takes a tax efficient salary -there is no “directors minimum” btw, you can go entirely without a salary should you choose, it’s about paying enough salary to ensure NI stamps are paid for pensions etc while paying less tax by taking dividends, if they can be taken at less than you’d pay on a salary and/or corporation tax… which leads to…

btw tax free dividend maximum is now only £500 per year before they incur tax, so the tax efficiency is vastly reduced. We don’t pay dividends any more as I also work outside the company and it would mean we get hammered for tax on my salary + dividends.

so when dh says he takes home a 12k salary from his company, he actually does only bring that home. Not hiding money, or avoiding tax, as we pay corporation tax on any profit.

we live a nice lifestyle because I earn the decent wage, and we live on that. It may well be his new wife’s money, and you are not entitled to that.

like I said, if you think he is cooking the books, as in committing fraud, you need to report to HMRC. Now, not waiting.

if he is, will it be enough extra money to get yourself out of you current money issues? Can you do anything yourself to start earning money? What will you do when the CMS stops?

Not correct. I think you are confusing directors with shareholders, which although often the same, can also be different. Directors are not paid dividends, shareholders are.

So do you have a private arrangement currently? I would go through CMS you can ask for a mandatory review and request the FIU to investigate him. It takes a while. Good luck @Dividendsquery

Thank you, yeah we already go through CMS and my ex pays me more than he has to but still very little considering his obvious wealth, the fact that I’m getting more than 20 quid a week means I’m scared to ask them to look into it and I suspect that’s exactly what he’s doing it .
I’m going to contact CMS and see if they can look into this without initially contacting him, it might just be a matter of checking his tax returns again? I just think there’s some odd falling through the net going on… I’ve also considered getting a private investigator to do a sweep and see if they can come up with any proper info, googled him today and he is all over the internet with multiple companies

as I say, I’m dealing with very serious health issues and I also work full time.

Directors are often the shareholders in small LTD companies, but pp is right, it's the shareholders that get dividends.

They don't have to be the same. You can have preference shares, meaning she could get a big dividend while he gets little to none. Or maybe he's not a shareholder at all.

Also we have a long and colourful history of all kinds of abuse including financial (from him to me) and I am scared of what’s going to happen if I go up against him on this, hence me wanting to leave it as late as possible, and hence me not wanting to dive in and cause a fuss and as I’m sure something will come of it. I don’t think he is cooking the books but also something isn’t right about this situation, and I did read that if there are dividends not being taken which could be taken that can be seen as deprivation of assets, this was specifically to do with child maintenance

Imagine a world where are you bothered to read OP properly and realised exactly why I’m afraid of flagging this up until the last minute. Thanks/ don’t give a tiny crap about whether you are sympathetic. Looking for practical advice only

It’s pretty impossible to hide money in a limited company…

Sounds like it’s fairly hopeless then. Sorry my posting is a little bit chaotic
I wanted to clarify from my previous post I do work full time I am self-employed and my poor health is hugely hit my ability to function well and is expensive in itself, therefore = church mice situation

I also read on a petition that there are some malfunctions that can happen in the system including dividends not being properly declared depending on the time of year they CMS assessment is done … cognitively I’m pretty smashed up by the treatment I’m having at the moment so trying to make sense of it all but I think I will just call them tomorrow and see what they say

You should request a mandatory review of additional income variation on the grounds of diversion of income. In your case, his lifestyle does not match his declared income. They don’t like to investigate (when do they ever) but if you keep at it you may get results.

Thank you 🙏

https://petition.parliament.uk/petitions/751159 Hi OP, I've set up a petition to ask the government to look at this very topic, maybe have a look and sign and share if you are interested?

What you are going through is such a well known loophole and tactic, it seems crazy that the Government have never looked at how it harms children and their families.