Registering a business under someone's individual name

[Jinhoon (jade) Baek]

Hi

i wonder if its against the law registering a business under someone's individual name.

for example (LTD company)
The registered company’s director is mike but actual owner of the company is james who gets all the profits and owns the company And james is hired as an employee who gets only £700 a month.
I know this company makes more than £30,000 a month but they both report they get paid £700 and james send extra money to mike’s personal account in another country.
Mike who is a director of this company, he is actually hired by James.

 

[Scalloway]

Is James named at Companies House as a Person with Significant Control (PSC)?

 

[Jinhoon (jade) Baek]

Is James named at Companies House as a Person with Significant Control (PSC)?

No just mark

 

[japancool]

Sounds dodgy as hell.

Sending money to someone's offshore overseas personal account? Tax evasion, if nothing else..

Is the next question "How would they catch James if he does this?"

 

[Mr D]

Its normal for the owner of the business to get the profits. They are the shareholder.
Director who runs the company gets a wage - again normal.

Directors do not get dividends. Only shareholders do.

 

[Mr D]

Sounds dodgy as hell.

Sending money to someone's offshore overseas personal account? Tax evasion, if nothing else.

Not if its dividends.

Tax evasion would be someone evading taxes. We don't know the person is evading taxes just that money is paid into an account elsewhere.

 

[Jinhoon (jade) Baek]

Sounds dodgy as hell.

Sending money to someone's offshore overseas personal account? Tax evasion, if nothing else.

Its normal for the owner of the business to get the profits. They are the shareholder.
Director who runs the company gets a wage - again normal.

Directors do not get dividends. Only shareholders do.

Oh i see so theres nothing wrong with this situation

 

[Jinhoon (jade) Baek]

Not if its dividends.

Tax evasion would be someone evading taxes. We don't know the person is evading taxes just that money is paid into an account elsewhere.

If its mark’s monthly pay then it will be a problem right?

 

[japancool]

Not if its dividends.

Tax evasion would be someone evading taxes. We don't know the person is evading taxes just that money is paid into an account elsewhere.

If James is sending Mark money out of his own personal account into Mark's overseas personal account, from the money that James receives from the company, I'd say that sounds like tax evasion. Unless, of course, Mark is declaring that as income. What are the bets that he is?

I mean, of course, this is just an example. Right?

 

[japancool]

James is, of course, properly declared as the owner and majority shareholder of the company, right? The shares are held in his name?

 

[Jinhoon (jade) Baek]

If James is sending Mark money out of his own personal account into Mark's overseas personal account, from the money that James receives from the company, I'd say that sounds like tax evasion. Unless, of course, Mark is declaring that as income. What are the bets that he is?

I mean, of course, this is just an example. Right?

Yes because my friend told me about this case and i told him it sounds tax evasion so report them.
I wanted to check before i talk to my friend again thanks

 

[Jinhoon (jade) Baek]

James is, of course, properly declared as the owner and majority shareholder of the company, right? The shares are held in his name?

Im not really sure about that but he definitely gets most of shares

 

[Mr D]

If its mark’s monthly pay then it will be a problem right?

Monthly pay would mean payroll, taxes etc.

Doing it as dividend would mean the company pays tax on it as profit anyway and Mark then pays whatever tax he's liable for on the money. Which isn't the same rate as would be if wages.

 

[Mr D]

Im not really sure about that but he definitely gets most of shares

Which for a 100% shareholder - you'd expect them to get all the dividends. They are the only ones who can.

Most common in small businesses is directors who are also shareholders.
Common for wage to be low (like as you say £700 a month). The shareholders can get much of their income via dividends which are taxed lower.

Nowhere near enough info to suggest tax evasion. However you can report your worries to HMRC and they'll perhaps look into it. They won't tell you what they do as you won't be a party to the problem.

 

[Mr D]

If James is sending Mark money out of his own personal account into Mark's overseas personal account, from the money that James receives from the company, I'd say that sounds like tax evasion. Unless, of course, Mark is declaring that as income. What are the bets that he is?

I mean, of course, this is just an example. Right?

But we don't know that taxes are or are not paid, or indeed even payable.

HMRC did a big exercise a few years back regarding people overseas and undeclared income. A problem raised repeatedly by tax campaigners going on about fraud.
For the most part it turned out that either tax was not payable or taxes were being paid at the right rate.