MD and pay

[Slashmb]

Can the MD of a company be paid less than the minimum wage since it is obviously their business and that is what they choose to do?

[JDFR]

Yes, but not simply because they are the MD.

[sumo69]

Yes as long as they don't have an employment contract (which is the case 99.9% of the time).

David

[anonymous-user]

It cost about 15 pound to become a MD so anyone or wage can become one, as long as not disqualified fromdoing so.

[Tallow]

To add to this, the MD doesn't necessarily own a company: Our MD has no shareholding in the company, which is not unusual.

[pavka007]

Well... Steve Jobs was paid $1.00 USD a year

I know a hotel owner who pay himself 6000 quid a year as salary... but this is private 25 rooms hotel, so he build separate living quarter (house) on the hotel grounds and his whole family live technically at the hotel. His heating, water, electricity are connected to the main hotel building, so he doesn't have any bills as such, he run his 3 cars on "company" accounts and him and his wife are claiming child support (3 kids) working tax credit and everything else they could. The whole set up is perfectly legal, there are so many loop holes to let them do this.
Is not his fault that the system allow him to do so and he is making the most of it. For the first 4 years after they build the living quarters (read house) they didn't even had a kitchen in the house it was just one big empty room.

Edited by pavka007 on Saturday 24th August 06:43

[myvision]

pavka007 said:

Well... Steve Jobs was paid $1.00 USD a year

I know a hotel owner who pay himself 6000 quid a year as salary... but this is private 25 rooms hotel, so he build separate living quarter (house) on the hotel grounds and his whole family live technically at the hotel. His heating, water, electricity are connected to the main hotel building, so he doesn't have any bills as such, he run his 3 cars on "company" accounts and him and his wife are claiming child support (3 kids) tax credit and everything else they could. The whole set up is perfectly legal, there are so many loop holes to let them do this.
Is not his fault that the system allow him to do so and he is making the most of it. For the first 4 years after they build the living quarters (read house) they didn't even had a kitchen in the house it was just one big empty room.

So he is robbing the tax payers?

[pavka007]

myvision said:

So he is robbing the tax payers?

Well you could say it this way, however he is not braking any laws. Don't get me wrong here I am not defending or not the guy, however I never met anyone who will not take advantage of situation like this if they could. We are all very concerned about what other people do, but if we could do it...no one will say no. In whole honesty if you were in his shoes will you do it? Probably you will... I never seen, or read about someone voluntary calling the tax office and saying: " Hey guys I would like to pay more taxes, benefits etc because I think I am underpaying and from the bottom of my heart I would like to help the government"

[Slashmb]

Just to expand a little, it's my OH's business (beauty salon, limited company), we are both MDs and she pays herself the same every month regardless of the hours she works. I don't work there if anyone was thinking that!

I was just wondering if we were doing anything wrong regarding the minimum wage.

Thanks for your replies, that's cleared it up for me.

[Centurion07]

myvision said:

pavka007 said:

Well... Steve Jobs was paid $1.00 USD a year

I know a hotel owner who pay himself 6000 quid a year as salary... but this is private 25 rooms hotel, so he build separate living quarter (house) on the hotel grounds and his whole family live technically at the hotel. His heating, water, electricity are connected to the main hotel building, so he doesn't have any bills as such, he run his 3 cars on "company" accounts and him and his wife are claiming child support (3 kids) tax credit and everything else they could. The whole set up is perfectly legal, there are so many loop holes to let them do this.
Is not his fault that the system allow him to do so and he is making the most of it. For the first 4 years after they build the living quarters (read house) they didn't even had a kitchen in the house it was just one big empty room.

So he is robbing the tax payers?

[davepoth]

myvision said:

So he is robbing the tax payers?

myvision, earlier.



It's completely normal. Think about the guy who owns the corner shop, or a pub landlord. He lives above it in a flat. As a result he's not paying rent or presumably council tax on his accommodation. He's probably also taking a much lower salary because he doesn't need to pay for accommodation. Why is this any different?

[Siscar]

pavka007 said:

Well you could say it this way, however he is not braking any laws. Don't get me wrong here I am not defending or not the guy, however I never met anyone who will not take advantage of situation like this if they could. We are all very concerned about what other people do, but if we could do it...no one will say no. In whole honesty if you were in his shoes will you do it? Probably you will... I never seen, or read about someone voluntary calling the tax office and saying: " Hey guys I would like to pay more taxes, benefits etc because I think I am underpaying and from the bottom of my heart I would like to help the government"

Well I think you'll find that he is, he's just relying on HMRC not doing an inspection and realising what he is doing.

[pavka007]

Siscar said:

Well I think you'll find that he is, he's just relying on HMRC not doing an inspection and realising what he is doing.

And I think that you are wrong. He owns the hotel, he owns the business, so he could pay himself whatever he wants. he bought the hotel with mortgage in 1988. The fact that he is running every expense using his business is totally legit. His cars are registered to the company so the fuel, the service maintenance is offset against the business. He is using office in the house as an the Hotel HQ, so all the bills there are going the same way, he could eat anything himself or his family want because he buys the stuff anyway.... so how is he different than any company around providing cars, mileage allowance or free lunches, free uniforms etc to their staff?
After all this, is the fact that he employs 35 to 40 people, using at least 5/6 local small businesses for support. From a window cleaners, to local el tech, dry cleaning, plumbers and not to mention all the local farms around him that supply everything from fresh meat to eggs, milk and bacon for the morning rolls.... just to name a few.
So show me how he is breaking the law and need to fear HMRC?
You are just jealous of him knowing the system and wishing that this was you

Edited by pavka007 on Saturday 24th August 11:08

[JDFR]

He lives in a hotel; what is there to be jealous of?

[pavka007]

JDFR said:

He lives in a hotel; what is there to be jealous of?

He lives in a house IN the Hotel grounds....

[JDFR]

Just to be clear, a lot of what you describe would be taxed as benefits in kind and that is why HMRC would interested. The chances of him getting caught are slim but it's not a loophole he is exploiting, he is just not being honest.

[pavka007]

JDFR said:

Just to be clear, a lot of what you describe would be taxed as benefits in kind and that is why HMRC would interested. The chances of him getting caught are slim but it's not a loophole he is exploiting, he is just not being honest.

I am not by any means expert in the tax issues but how any of this could be counted/taxed as benefits? The cars for example, they are hotel cars, not Director car, heating, electricity etc are office overheads and so on.
Would you be so kind to shed some light please. As I've said I am not an expert and haven't got a clue about all the ins and outs of the system.

[Siscar]

pavka007 said:

Siscar said:

Well I think you'll find that he is, he's just relying on HMRC not doing an inspection and realising what he is doing.

And I think that you are wrong. He owns the hotel, he owns the business, so he could pay himself whatever he wants. he bought the hotel with mortgage in 1988. The fact that he is running every expense using his business is totally legit. His cars are registered to the company so the fuel, the service maintenance is offset against the business. He is using office in the house as an the Hotel HQ, so all the bills there are going the same way, he could eat anything himself or his family want because he buys the stuff anyway.... so how is he different than any company around providing cars, mileage allowance or free lunches, free uniforms etc to their staff?
After all this, is the fact that he employs 35 to 40 people, using at least 5/6 local small businesses for support. From a window cleaners, to local el tech, dry cleaning, plumbers and not to mention all the local farms around him that supply everything from fresh meat to eggs, milk and bacon for the morning rolls.... just to name a few.
So show me how he is breaking the law and need to fear HMRC?
You are just jealous of him figuring the system and wishing that it could be you

Edited by pavka007 on Saturday 24th August 11:07

Well I own several businesses myself so I'm not coming at this with no knowledge or experience. I have some very good accountants who save me a lot of tax, but not by doing the stuff you are describing.

What you are describing are benefits in kind, which should be declared and are taxable. So the value of anything he or his family eat should be declared on a pl11D to HMRC. His car, if provided by the company but used for personal use, also needs to be declared to HMRC and tax paid and so on.

Of course you can in practice get away with some things but if you do it on a large scale and get audited there is a large bill to pay and many years of future pain from HMRC as they scrutinise everything you do.

[anonymous-user]

pavka007 said:

JDFR said:

Just to be clear, a lot of what you describe would be taxed as benefits in kind and that is why HMRC would interested. The chances of him getting caught are slim but it's not a loophole he is exploiting, he is just not being honest.

I am not by any means expert in the tax issues but how any of this could be counted/taxed as benefits? The cars for example, they are hotel cars, not Director car, heating, electricity etc are office overheads and so on.
Would you be so kind to shed some light please. As I've said I am not an expert and haven't got a clue about all the ins and outs of the system.

No, as you say, you're not an expert.

IF what you say is true, then he is for a world of pain when he gets discovered. Almost everything you mention would be a BIK and taxable. He must have poor auditors.

As I said, IF its true.

[pavka007]

REALIST123 said:

No, as you say, you're not an expert.

IF what you say is true, then he is for a world of pain when he gets discovered. Almost everything you mention would be a BIK and taxable. He must have poor auditors.

As I said, IF its true.

I appreciate your comment, however please be so kind not to question my integrity with your last line. I haven't made any of it and I stand by what I have written.
I know the guy for the best part of the last 15 years. I've seen it all first hand.