How illegal is...

Originally Posted by Captain Nemo

he can only take the money out as a directors loan if its profit that the company has already made, you cant take a directors loan on money that you know is required for the tax or vat.

even then it has to be formalised, im pretty sure the company has to eventually have a net beneift from the loan or HMRC come down on you.

Fair enough mate, I wasnt sure of the in and outs. All I know is my 2 bosses have done it in the past

Originally Posted by Captain Nemo

he can only take the money out as a directors loan if its profit that the company has already made, you cant take a directors loan on money that you know is required for the tax or vat.

even then it has to be formalised, im pretty sure the company has to eventually have a net beneift from the loan or HMRC come down on you.

My thinking too, you cant just take money without declaring it,

He inst doing it blatantly, its only because I see the financial side of things and brickwork crops up on a job where there is none, or £000's of fees for architects when we dont use them that we know about it,

Im not looking for a reason to get on my soap box about it, more out of interest than anything really as I like to have the facts if other people question me about it.

Na i'd be doing the same as you, any bit of dirt that might keep me on the payrol an id love to dig it up.
This does sound dodgey but I think it'll all be legit and if you ask the wrong person then it might come back to bite you on the ass.

[Bri w]

If the Company are building the houses its not illegal. If he's taking money from the company, i.e. paying himself then building the houses then there is an income tax implication.

[Sir Trev]

Originally Posted by Bri w

If the Company are building the houses its not illegal. If he's taking money from the company, i.e. paying himself then building the houses then there is an income tax implication.

Possibly. If he put capital into the comapny he can take it out for whatever purpose he likes. Directors loans are also a minefield but again, he can almost certainly do what he likes with them as long as they are declared on his tax return.

The payments for supplies and services for this non-company project would worry me more. If these costs are lowering the company profits then less corporation tax will be payable to HMRC at year end. Assuming the profit on the houses at the end of the project is not comany profit that is.

Thankfully as a CIMA beancounter I never have to get into this sort of tax quandry!!

Originally Posted by 454697819

My thinking too, you cant just take money without declaring it,

He inst doing it blatantly, its only because I see the financial side of things and brickwork crops up on a job where there is none, or £000's of fees for architects when we dont use them that we know about it,

Im not looking for a reason to get on my soap box about it, more out of interest than anything really as I like to have the facts if other people question me about it.

hes probably looking at tax evasion if its profit thats been hidden and then pumped into other less profitable projects, and probably false acounting if he never admits it,

although, you can do things any way you like as long as at the end of the year everythings back in the right basket, you could just argue that its very difficult to keep track of things if you dont do things to an established system like you have,

yup, by the sounds of it, profits going from one project into another less profitable or invisible project, i asssume hes not invoiceing a client for materials etc that arent used, hes just using it to boost his "actual"cost for a project as oppsed to billable, companies house would probably never find out, what they will look at though is if turnover goes up or down substantially and if profit loss alters out of step, then they get suspicious and snap on the rubber gloves..............and theyve seen and heard it all............

Not just flag it up with someone?
Don't mention any names, take it up with someone...

Why are there x amount of materials being 'used' when we aren't using any on the job?

[Stu]

Originally Posted by Captain Nemo

hes probably looking at tax evasion if its profit thats been hidden and then pumped into other less profitable projects, and probably false acounting if he never admits it,

although, you can do things any way you like as long as at the end of the year everythings back in the right basket, you could just argue that its very difficult to keep track of things if you dont do things to an established system like you have,

yup, by the sounds of it, profits going from one project into another less profitable or invisible project, i asssume hes not invoiceing a client for materials etc that arent used, hes just using it to boost his "actual"cost for a project as oppsed to billable, companies house would probably never find out, what they will look at though is if turnover goes up or down substantially and if profit loss alters out of step, then they get suspicious and snap on the rubber gloves..............and theyve seen and heard it all............

Doesn't sound like he's doing it for tax evasion reasons, but that will apply too.
Companies House would never investigate anything, only HMRC would.
Yup looks like false accounting, but not to the extent that the Serious Fraud Office would get excited about.
So it's tax avoidance and theft from the company (shareholders). Director's loan is nothing to do with it if it's being accounted to different projects, not the Dir's Loan

it is basically coming out of any profit on the job, but whilst the job is running, so if I write out a PO and put the job No. on it it gets charged to that project.

Just slightly annoying to see him building 2 houses whilst making the jobs report badly and then making ppl redundant... "grump"

his train set though

yeah but has he made people redundant due to lack of work/money within the company, or has there position become redundant, eg no work in their existing roles, meaning they become surplus to requirement.

i dont think what he's doing is illegal. ok the company are not allocating the costs of these jobs in the correct place (i used to have invoices for corporate weekends away allocated to jobs that had been finished for 5years in my old place!). but at this moment in time it still looks (on paper anyway) that your company are building these homes for a client, the director. he can still pay the company for carrying out these works. yes its not a nice thing to do, but are you liable to put your job on the line flagging this up? maybe worth while just keeping the head down and getting on with it. it is his company after all, these are the benefits of being at the top of the tree, he doesnt have anyone to answer to!