ltd employing mates

[sholdice]

A good friend is going through the process of getting a mortgage. He lost his job last week and thinks this will affect his application. He has asked me to 'employ' him in my Ltd company.

Is there any way I can help him out? I'm under the impression he will need to provide payslips which clearly don't exist. I do not want to do anything illegal, nor do I want to overly complicate my tax status, or jeapordize his mortgage application.

Any advice?

[tim123]

How does your mate expect to pay the mortgage when he is out of a job?

Does it really sound sensible to help him out in this way?

Does it sound legit to you?

Who do you think they will chase for the missing money when they repo his house? A guy with no money or someone who has some?

tim

[partimer]

Question for you.
Are you really going to employ him ?

If you aren't then is obtaining money by deception:
A) legal
B) illegal

Ask Mandy (Tony Bliar's friend) who's now chief of Europe

[sholdice]

Well, what constitutes employment? Is it illegal to employ him for a nominal salary, having signed a contract detailing services he will provide?

Please understand, Im concerned with the legality and tax implications, questions like 'How does your mate expect to pay the mortgage when he is out of a job?' are absurdly unhelpful.

sc

[silicondale]

Possibly

Is it illegal to employ him for a nominal salary

Yes - if 'nominal' means below the national minimum wage.

[xoggoth]

Re: Possibly

I could be wrong but how does paying a "nominal" salary help? To further a mortgage application it would surely need to be significant, ie sufficient to cover the repayment. Do you intend to actually pay him such sums or just issue false payslips? AFAIK issuing a false payslip is not an offence, but I think giving false information to obtain a morgage is.

[JS]

Re: Payslips

How much of a mate will he remain when he wants the money to match the payslips. You have given him legal documentation that says you owe him money and then not given it to him.
How many does he want? Six months worth?

I think you can look forward to him taking to you court for unpaid wages and tribunal for unfair dismissal.

How are you going to defend in these places, stand up in a court of law and state "I colluded with this person in defrauding a building society/bank by providing false documentation" and go to jail or will you just pay-up and chalk it up to experience??????

[silicondale]

false payslip - and PAYE

AFAIK issuing a false payslip is not an offence

But I think you may find the Inland Revenue take a dim view of the practice and will knock at your door for the tax and NICs due on the amount the payslip says you have paid !

Altogether, I think the idea is a complete non-starter for a myriad reasons. You're likely to lose a friend, be hauled before an employment tribunal, and finish up in prison for tax fraud and conspiracy to defraud the mortgage provider,....

[partimer]

re: false payslip - and PAYE

Echoing much of what's been said above.
If your mate hasn't worked for you for > 3 months then most banks ask for an employment contract as proof they are employed and not shouting their mouth off.

Are you really going to draft one up ?
Then it's employer liability insurance on top due to your new employee.

Then the money he wants to borrow. Say x4 salary and he wants 100k.
Are you really going to offset 25k (not even discussing employer's NI !) and make pay slips out to him ?

You know what this means from the discussion above.

Pretty much a non starter if you're trying to be legal ...