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Company Director

  • fatherted
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28 Nov 07 #7963 by fatherted
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Hi, I have a question about being self employed.

I own a small IT Consultancy company. I am the Director and y wife is the Company Secretary. We are starting the divorce and she seems to think that half the company assets will be hers.

I am getting conflicting advice. Can anyone clear this up?

Thanks in advance.

  • NE0
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28 Nov 07 #7970 by NE0
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Hi Fatherted
As an IFA I have a similar business structure to you, so understand where you are coming from. In answer to your question all assets accrued during the marriage are taken into account but the division is not necessarily 50-50 and it is possible to offset one asset for another if you are both in agreement.
I suspect that you have formed the Limited Company for tax efficient reasons and its main asset will be you and your technical ability. So on paper its value would be very nominal as you may have some hard assets like IT equipment and office furniture etc and some work in progress. It’s likely that your soon to be ex (stbx) will be advised by her lawyer on this front and change tact slightly to look more at your earning potential than your capital value.
There are some interesting things that a Company Director can do to help retain a fair degree of their earnings. My ex wanted a share in the value of my company car mmmm not my asset!! Needless to say she didn’t have a very good lawyer or IFA ! If I can be of any help please let me know

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28 Nov 07 #7972 by fatherted
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Hi NEO, thanks for the swift reply.

I operate as a limited company as to get an IT contract with a large firm they generally need you to be limited.

All my earning come in the form of dividends and a small monthly salary. My stbx also has a tiny salary (basic wage) and a pension from my company.

I suppose what I’m looking at is as we have a large mortgage the house will need to be sold to pay that off and I’m assuming that the proceeds will then be spilt 50-50. This will leave us both enough to buy a decent house each. Stbx also wants half my pension and half the company ‘bank account’ so to speak. As we have 3 kids I will pay (happily) for their upkeep, but right now I don’t particularly want to pay for stbx upkeep as well.

As for my earning potential, I do wonder how that is calculated as I’m self employed. If I lose a contract and cannot get another one I earn £0!

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28 Nov 07 #7994 by Mrs Ingledew
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I'm in a similar position. Except my stbx cleared the business accounts before he left of 2 years of corp tax! The view seems to be as major shareholder I am aliable for the debt to the tax man - and therefore take his debt.

Also there are computer games being sold for which we share royalties and a game in development that he has "taken" to develop with the comment - "I won't give you anything." I worked through computer consultancy to pay for him to develop the game and support a small team.

Over to the judge in my case.

Looks like I might have to pay my ex maintenance for him walking out with cash to live with my friend and leaving me the debt and the children!

I sound bitter - I'm not I just don't see why I should keep supporting him and his palyboy lifestyle.

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28 Nov 07 #7998 by NE0
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Company directors can control so much of what they end up with as Net income that they are great to work with if you are trying to retain wealth and difficult to get a result from if you are acting for the person who has “lost everything”
If you are trying to minimise maintenance orders then you need to focus on getting your net income down. I hear what you say regarding your children and I am of the same opinion. I won’t see my kids go without and so pay a fair amount to cover their needs, but I would rather have that choice than be forced to pay it. So as a company director may be you should consider a company car, for all the reasons why people move away from them, the tax implication!! You are taxed on the benefit that your company provides and so your net income is reduced, but you no longer have any car costs (because you paid extra for that fully maintained service contract right?) so you don't need such a high salary, and then you decide to add to the luxury of a company car by having the company pay for your fuel, again you get taxed on this as a benefit but what you are doing is placing the direct cost on the company and receiving a tax increase personally so your net income is reduced.
The company may also decide that you need some private medical cover and some Long Term Income Protection cover as well, you get the cover, but the company funds the cost so your income can remain as low as necessary to sustain your lifestyle. I know a great IFA who can help there!;)
I would need to take advice from an accountant as to the minimum age that children can work for an employer, but it would theoretically be possible to pay them a salary out of the company providing they legitimately worked for the company, this opens up an option for the company to pay into a pension plan on their behalf and once again reduce corporate profits whilst keeping wealth within your family.
Don't forget the generous right down on IT expenditure, and those lovely Flat Screen TV manufacturers make them double up as PC monitors mmmm wonder if your accountant can get that through the books???
Oh did I mention that you can receive relevant advice from your friendly IFA who can work for you on a Fee basis and whilst advising the Limited Company it can pay their Fee, so you stbx might just end up paying half towards the quality advice that might help you reach a fairer settlement.
I am getting a bit giddy now as I am away next week getting some sunshine but I hope that some of those ideas might prove useful.
I am sorry to hear about your ex grabbing all of the cash and legging it, is there no possibility of a back door in the computer game and extracting a little revenge… or have I watched too much Spooks? I hope the judge sees him for what he is and makes the award fair for you.

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28 Nov 07 #8011 by fatherted
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taylr14 - gee thats pretty rough! Surely him taking corp tax is simply fraud!!

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28 Nov 07 #8012 by fatherted
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NEO, thanks for that, lots info there to take in. I'll be talking to my accountant this week!

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