Company Director with kids and an Ex - help please!

[JamJarST]

£340 p.m.

Count yourself lucky and keep paying.

[craig1]

Has anyone had dealings with the CSA? Yes
Has anyone got any advice that might help me? Document everything and keep copies. If you ever speak to one on the phone then make sure you get their name, that makes them more honest in my experience, anonymity makes them reckless.
Is it worth transferring more shares to my wife? No, your wife's "earnings" are fair game for the CSA as well.
Will my wife's income or dividends be taken into account? See above
How long does the process take to sort out? You're liable the second the process starts but it could drag on for years.
I've heard that they don't take dividend income into account unless the parent with care asks for a 'variation' or if I'm obviously living beyond my means (Ferrari, Maserati etc - I wish!)
I gather that most 'variations' can take years to look into and in most cases the CSA simply can't prove anything, nearly all of them get thrown out. Income is income and it's your self-assessment they'll want to see if you're a company director. They also need to prove nothing. If you're living in a paid-for house but pay yourself a pittance they can bill you based on you "lifestyle inconsistent with declared income.". Also, if you have a high asset base in the company, they could assess that as being not used to its maximum potential and assess against that as well.

see bold comments above. In short, if you get involved with the CSA, they will tulip you around and won't lose any sleep over it.

If you're a company director, in my experience, they seem to think you're a director of a multinational PLC and won't believe you're not earning that sort of income. They insisted on my company books and got very shirty with me when I told them to go download them from Companies House, especially when they discovered they weren't audited books. They even sent a deduction of earnings order to my company before they contacted me the first time as they believed every line of my ex's story; they got very threatening when I told them I didn't operate PAYE as LLPs don't have to.

I suppose it didn't help that I felt the £400 per month I was paying was more than fair for one child when they wanted substantially more. Their final assessment about 18 months later and after plenty of appeals was £350. Cretins.

[northernladuk]

I didn't read the whole thread in detail as I have never been in this position but one thing that does strike me is the situation the OP is in regarding his new wife's divis and salary. As the ex is crawling all over him and is willing to stick the knife in I would advise the OP to check his situation very carefully. He is paying his wife around 7K a year. Is she REALLY doing 7K's worth of work.. and I mean proper hours, justifiable and demostratable work. Doing your books and answering your phone is NOT 7K's worth. An accountant charges 1200 a year so 7k for doing your books is ridiculous.

Is your share divi 50/50? Is it going in to her account not a shared (arguable I admit) account or yours? Are there a number of large money transactions from her account to yours etc. Does it even look remotely like you are avoiding paying tax?

I would get your house in super clean order before she decides to dob you in it and get HMRC looking at your books.

Horrible situation to be in for sure but make sure your house is super tight.

[peedoff]

I didn't read the whole thread in detail as I have never been in this position but one thing that does strike me is the situation the OP is in regarding his new wife's divis and salary. As the ex is crawling all over him and is willing to stick the knife in I would advise the OP to check his situation very carefully. He is paying his wife around 7K a year. Is she REALLY doing 7K's worth of work.. and I mean proper hours, justifiable and demostratable work. Doing your books and answering your phone is NOT 7K's worth. An accountant charges 1200 a year so 7k for doing your books is ridiculous.

Is your share divi 50/50? Is it going in to her account not a shared (arguable I admit) account or yours? Are there a number of large money transactions from her account to yours etc. Does it even look remotely like you are avoiding paying tax?

I would get your house in super clean order before she decides to dob you in it and get HMRC looking at your books.

Horrible situation to be in for sure but make sure your house is super tight.

Everything is in order - believe me! Accountants have been involved in the company from the off, my wife is a legitimate director, as so she gets a dividend to reflect her share value, which is just less than 50%. My ex has no knowledge what so ever that I have sold the shares in my previous business, have another business or have stopped working yet, admittedly it won't be long though. Tax avoidance is legal - that's why I have a decent accountant, tax evasion is illegal, they are 2 different things, taking a small salary topped up by a dividend is perfectly legal, everyone does it. We don't have large transactions going between bank accounts, everything is clear enough, I don't think the HMRC would have anything to pick over to be honest but thanks for your input and concerns.

[peedoff]

see bold comments above. In short, if you get involved with the CSA, they will tulip you around and won't lose any sleep over it.

If you're a company director, in my experience, they seem to think you're a director of a multinational PLC and won't believe you're not earning that sort of income. They insisted on my company books and got very shirty with me when I told them to go download them from Companies House, especially when they discovered they weren't audited books. They even sent a deduction of earnings order to my company before they contacted me the first time as they believed every line of my ex's story; they got very threatening when I told them I didn't operate PAYE as LLPs don't have to.

I suppose it didn't help that I felt the £400 per month I was paying was more than fair for one child when they wanted substantially more. Their final assessment about 18 months later and after plenty of appeals was £350. Cretins.

Wow contractor mate pays £400 a week for 2 kids that spend < 1 night a month with him

CSA have an online calculator

That means he must be taking home in excess of £104000 p.a. - after tax, I can't understand that if he's not, are you sure you don't mean £400 per month?

[northernladuk]

Everything is in order - believe me! Accountants have been involved in the company from the off, my wife is a legitimate director, as so she gets a dividend to reflect her share value, which is just less than 50%. My ex has no knowledge what so ever that I have sold the shares in my previous business, have another business or have stopped working yet, admittedly it won't be long though. Tax avoidance is legal - that's why I have a decent accountant, tax evasion is illegal, they are 2 different things, taking a small salary topped up by a dividend is perfectly legal, everyone does it. We don't have large transactions going between bank accounts, everything is clear enough, I don't think the HMRC would have anything to pick over to be honest but thanks for your input and concerns.

It is legal if it is justified and just because everyone does it doesn't mean it will cut the mustard when investigated. I only raise this as we have many posts where people do the divi's and PAYE because they can without realising why. They also believe that answering the phone and doing the books is justification for 7K and it isn't. We tell our accountants it's ok so they take our words, doesn't mean it is right.

Sounds like you got it sewn up though so not an issue in this case.

[peedoff]

Stop paying her then. If she wants to play it that way so can you.

The CSA will send you letters but if you ignore them they'll eventually feck up and leave you along for a few years.




As an aside if it was me I'd take them out of school one day then mysteriously disappear to a foreign country.

Hi Sockmuppet - that's my preferred option, stop paying and let her chase me, it could take ages to sort everything out, that would give her some sleepless nights rather than me, but seriously, what's the worst thing that could happen - they start doing some digging, find that I have a company and take dividends plus small salary, plus my wife gets dragged in and they eventually come out with an assessment at more than I pay now, I hear of so many people that have Ltd companies getting away with paying little or nothing and leading the CSA astray, why not me? Why should I constantly cough up for somebody that loves making things difficult for me?

[peedoff]

It is legal if it is justified and just because everyone does it doesn't mean it will cut the mustard when investigated. I only raise this as we have many posts where people do the divi's and PAYE because they can without realising why. They also believe that answering the phone and doing the books is justification for 7K and it isn't. We tell our accountants it's ok so they take our words, doesn't mean it is right.

Sounds like you got it sewn up though so not an issue in this case.

So are you saying that my wife's and my dividends have to be proven to be earned? OK, she does very little other than do some filing and a bit of paperwork, but do I have to justify paying her by keeping logs of her work, times, have a clocking in card?!! To be honest the company is just a vehicle to keep things tied up in a Ltd company, otherwise I'd have would it up and paid 10% entrepreneurs tax, but that would mean me having a bank account that my ex can get at?!! There's no easy answer. Thanks though, I appreciate any comments or ideas, it's what's keeping me focussed at the moment.

[JamJarST]

Hi Sockmuppet - that's my preferred option, stop paying and let her chase me, it could take ages to sort everything out, that would give her some sleepless nights rather than me, but seriously, what's the worst thing that could happen - they start doing some digging, find that I have a company and take dividends plus small salary, plus my wife gets dragged in and they eventually come out with an assessment at more than I pay now, I hear of so many people that have Ltd companies getting away with paying little or nothing and leading the CSA astray, why not me? Why should I constantly cough up for somebody that loves making things difficult for me?

So you only pay because you have to and not because you have a responsibility to your children?

[peedoff]

So you only pay because you have to and not because you have a responsibility to your children?

I'd love to have more input and have responsibility for my children, but it's difficult when she changes their names, fails to tell me when they are ill (even though I've been paying for private health care), stops me from seeing them, never passes messages on, talks to me like I'm muck, fails to talk to me telling me I've got to sort out my arrangements - she "can't do it" for me, constantly tells lies to my kids, friends and family, does not involve me in schooling, parent evenings, you don't (or can't) understand how it feels mate.