Reply to: Directors loan of £250,000

[Wanderer]

I know this is an a contractors forum

Yes, you are right. This is a contractors forum.

I hope you found the information you were after and good luck with your divorce.

[MarillionFan]

Yeah! Cos CUK is soooooo different from every other forum. No one could possibly get the hang of quotes and smileys within well about 8000 odd posts (and this one was one of your oddest)

Good point Drewster.

[Mojito]

I know this is an a contractors forum; but I couldn't agree with you more, he is a waster and my beautiful son and I are better off without him

Actually I'd disagree - your son is better off with him in his life regardless of what you may think of him. The financial situation is between you and your ex, not him and his son.

[Wodewick]

Well good luck.

You seemed to have got the hang of our smileys and quote system incredibly fast. You must be very clever so I have no doubt it will work out. :

Yeah! Cos CUK is soooooo different from every other forum. No one could possibly get the hang of quotes and smileys within well about 8000 odd posts (and this one was one of your oddest)

[MarillionFan]

I know this is an a contractors forum; but I couldn't agree with you more, he is a waster and my beautiful son and I are better off without him

Well good luck.

You seemed to have got the hang of our smileys and quote system incredibly fast. You must be very clever so I have no doubt it will work out. :

[wallop79]

WMS
That is the crux of the matter, the money is to support his children and he doesn't want to. Waster!

I know this is an a contractors forum; but I couldn't agree with you more, he is a waster and my beautiful son and I are better off without him

[wallop79]

[QUOTE=Mojito;1203246]Your application for a variance (presumably SM) along with dubious accounting practices would possibly put a judge in mind to order a "lifting of the corporate veil" which - as far as I am aware - would allow you full access to all the books, records and accounts of said business. Give this to an accountant and an accurate picture of his income & assets could be established for your variance request and also for a revised CM figure. The CM would be good for a year before he could request a review from the CSA.

On a more human note, how can he sleep at night short-changing his children like that?

he is despicable, especially as he pertains he is a catholic! or so he thinks that going to church once a week makes him one.

[Scrag Meister]

On a more human note, how can he sleep at night short-changing his children like that?

WMS
That is the crux of the matter, the money is to support his children and he doesn't want to. Waster!

[Mojito]

Lifting the corporate veil

Your application for a variance (presumably SM) along with dubious accounting practices would possibly put a judge in mind to order a "lifting of the corporate veil" which - as far as I am aware - would allow you full access to all the books, records and accounts of said business. Give this to an accountant and an accurate picture of his income & assets could be established for your variance request and also for a revised CM figure. The CM would be good for a year before he could request a review from the CSA.

On a more human note, how can he sleep at night short-changing his children like that?

Edit - this may be of interest:

http://www.familylawweek.co.uk/site.aspx?i=ed32399

[wallop79]

I have applied for a variation and this is when the money went into the business, but as people have still pointed out this is still an asset, he is a multi millionaire and currently paying £9.00 per week maintenance through the csa as when he made the co. ltd he said he is only paying himself £136 per week, he is a skilled electrical engineer with over 30 yrs experience and wouldnt work for £136 per hour never mind per week, it is now going to a tribunal (which takes 6 months!!) and I just wanted to have my facts straight about a few issues which i will need to put into a letter to the tribunal, one of which was the directors loan issue, he is diverting his income to avoid paying maintenance and I will be putting that also into the letter to the tribunal, thanks to all of you for your advise and guidance, it is very much appreciated.

[ASB]

He's put the money into the business with regards to a CSA case against him, and stating that it is needed to keep the business afloat and to pay wages etc., which is a pack of lies, he's traded successfully for 28 years and as soon as the comp. was made limited it suddenly had no money, so he had to use his own personal money to "keep the business afloat". Unfortunately he doesn't have to file his accounts until July 2011.

There are a number of issuesFrom a point of view of a divorce settlement (i.e. explicity NOT the CSA) this is still an asset of "his". It is relevant in terms of the form E and where you may negotiate settlement.

From a point of view of the CSA it is largely an irrelevance. CSA assessment is based on income and payment based on % of that in accordance with number, age and the living arrangements of children etc.

The issue you will probably face with the CSA is what his assessable income is. You can request that dividends are included, you have soem other options related to variation. A problem may well be that by leaving funds in the company (and I suspect this may well be his plan) he doesn't need to pay much in the way of salary or dividends. He can live off the loan repayments until such point as the children are no longer eligible for CSA support. [He would have been able to do this anyway even without making the loan to the company - simply take no income = No CSA - and live off that capital].

However, you are entitled to apply for a variation to the CSA, this may or may not be successful.

[THEPUMA]

I think the crucial point for your lawyer to make is that he still has an asset valued at £250K, namely the debt owed to him by the company. He may argue that the debt is unrealisable but I think the onus would be on him to demonstrate that.

Puma

[Scrag Meister]

I suspect some decent legal advice would be useful, rather than a forum like this, although there will be useful suggestions.

It probably depends on the agreement between him and his company over the 250k.

Ensure the CSA are aware of his company directorship.

[doodab]

He's put the money into the business with regards to a CSA case against him, and stating that it is needed to keep the business afloat and to pay wages etc., which is a pack of lies, he's traded successfully for 28 years and as soon as the comp. was made limited it suddenly had no money, so he had to use his own personal money to "keep the business afloat". Unfortunately he doesn't have to file his accounts until July 2011.

One aspect of being a sole trader is that there is no legal distinction between your money and the businesses money, and you personally are liable for the full debts of the business, which can mean losing your house, car etc if things go wrong. A limited company is a separate legal entity. When you start one the only money the company has is the initial share capital, and the liability of the shareholders is limited to this amount.

If he was a sole trader then what you think of as "his personal money" included the working capital of his business and this plus stock, equipment etc would need to be transferred to the company in order for it to be able to trade. As far as I know there is no reason some or all of the working capital couldn't be provided as a loan from a director, and that seems to be what he is doing here.

You don't say what he did exactly, but if for example he's supplying & installing network equipment & servers on behalf of SMEs then with 2 or 3 jobs on the go at once and clients paying 60-90 days after the invoice goes in then the company would need quite a bit of working capital to fund the gap between paying suppliers and getting paid. Similarly if he has staff or subcontractors who need to be paid before he gets paid the business will need the money to pay them.

As regards taking money out of a company, it can pay you a salary (taxed as in a normal job) and if you have enough retained profit you can pay a dividend (taxed as normal share dividiends, with some extra rules around NI related to IR35). You can also submit business related expenses you have personally incurred, so that the company will repay you. There are quite strict rules about what is allowed.

BTW, to put things in perspective, I'm in a similar situation (i.e. freelance individual rather than a company) in Germany, and even though I don't have staff to pay, I have tens of thousands sitting in my bank account that isn't actually mine.

[wallop79]

He's put the money into the business with regards to a CSA case against him, and stating that it is needed to keep the business afloat and to pay wages etc., which is a pack of lies, he's traded successfully for 28 years and as soon as the comp. was made limited it suddenly had no money, so he had to use his own personal money to "keep the business afloat". Unfortunately he doesn't have to file his accounts until July 2011.