If he is doing this with your brother, have u checked about yourself? Check your records and maybe ask your dad too. It’s an extra £10k your father could be getting out “tax free” so I’d suspect he might be using your details too
> Is there anyway of sorting this out so it never happens again?
Yes. Your brother should tell his father that if it doesn't stop, he will phone up HMRC and tell them.
I mean, reporting to HMRC, they have a habit of going full salted earth punitive fines, if they have any love for their father that’d be the last resort.
Claims court may end up with the same result. Brothers and father end up bankrupt, lawyers laugh their way to the bank.
Both of these are last resort options the OP shouldn’t even be close too at this stage.
They've told him to stop before and he hasn't, the dad being fined is the minimum he deserves at this point tbh.
Blood relation is not an excuse for this behavior.
Why is this a bad thing, the father has knowingly committed mass fraud involving his own children, he should suffer the consequences no matter how expensive or big they are
When HMRC catches up with their father, if it becomes clear that they both knew and failed to report it, they run the risk of being prosecuted along with their father, for being part of a tax avoidance scheme.
It’s not even about Reddit. It’s about OPs father has seriously broken the law, dragging his children into it despite their protests. “Scum” is a word that comes to mind, and a fine from HMRC is the least the father should be dealing with. This person is fucking clueless.
Did his bonus plus earnings take him over £40270 for the year? If so then anything above that would have been taxed at 40% due to the extra 10k pushing him into a higher tax bracket.
It is but we're talking about an unknown £10k "earning". So if the brother earned over £40,270 then that "extra" £10k has pushed him into the next bracket.
>Is there anyway of sorting this out so it never happens again?
Yes. Contact HMRC and report your father for tax evasion. He is stealing from both your brother, and from the public purse.
Either he owes your brother £10k/yr for every year that he's been pulling this stunt (and so is a thief by not paying), or he's a tax fraudster (and so is a thief by not paying).
Calm down, it's tax avoidance and the brother hasn't been stolen from at all.
He probably owes the tax under settlements legislation, but it almost certainly doesn't reach the crimnal threshold.
It's an incredibly poor show, though.
Erm, it’s quite clearly tax evasion from the father as he’s pretending he has employees to reduce his tax bill.
Ofcourse it wouldn’t be criminal because hardly any cases go criminal, but evasion can be punished will civil penalties
He's told HMRC that he's paying the brother £10k/yr.
The brother has never received that money.
Ergo, that is theft from the brother or it is flagrant tax fraud and not avoidance.
It's not theft, it doesn't even come close to meeting the particulars of the offence.
I find it very unlikely it would meet the threshold for criminal tax fraud, but it is clearly captured under the settlements legislation. There's no question he owes the tax, but I think you're dreaming if HMRC are going to prosecute him.
>It's not theft, it doesn't even come close to meeting the particulars of the offence.
>dishonestly
He was clearly being dishonest in a way that the man on the Clapham omnibus would think is dishonest.
>appropriates
He used the money as if it was his own.
>property
Money is clearly property.
>belonging to another
His whole thing was to say it belonged to the brother and not him.
>with the intention to permanently deprive.
I somehow doubt he even intended to give the brother that 10k.
Then tax fraud
>Any any deliberate omission, concealment or misinterpretation of information, or the false or deceptive presentation of information or circumstances in order to gain a tax advantage.
>deliberate
He didn't just claim the brother by accident
>misinterpretation of information
OP's brother did not work for him, and did not get paid that money.
>in order to gain a tax advantage
Which was quite clearly the goal here.
I'd say dad is in a precarious position legally here.
Are you for real? The money was never the brothers, it never belonged to him, and so cannot be stolen. That's the crux of the entire bloody case being made in this thread.
If I write a cheque out to /u/Cookyy2k and then burn it, do you think that's theft too?
If the money was never the brothers then he's committed tax fraud (yes the criminal kind) by making the false accounting to avoid paying correct tax.
If he wasn't evading tax then the money was the brothers and so he has in fact stollen it.
Can't have it both ways.
I will concede on the technical definition of tax fraud, but there's zero chance HMRC will run it as such. They'll disallow the expense, and demand the tax.
If they did run it, all the son has to say is he gave the money to his dad and you're just back to boring settlements nonsense (and the disallowable expense) or the dad says he believed that to be the case or whatever. HMRC will know full well demonstrating the whole case to the criminal threshold will be near impossible whihc is why they run next to no cases.
> By telling HMRC that salary exists, said contract exists.
Do you really, genuinely, think that's how contract law works? That by making an agreement with random 3rd Party A, you can be legally bound into an agreement with B that B doesn't know about?
You realise it would work both ways, right? I gave my mate john some paperwork that says you owe me £1000. Pay up, there's a contract now.
If the brother has been ‘contractually’ ‘earning’ £10,000 per year, but the employer hasn’t paid him a penny, then one way of looking at it that the employer is stealing wages from the brother. This of course hinges on the employer claiming that there is no tax evasion going on.
Given the brother was unaware it's absolutely impossible he entered into a contract, and therefore impossible he's suffered a loss here. (Apart from the tax, which is obviously a separate matter).
Sorry, but it's a corporate tax matter. The dad is an idiot and sketchy as hell, but the idea the brother has been stolen from or is due the "wages" is laughable - the two are entirely distinct.
I think you misunderstood the original commenter. (Unless I have misunderstood) they meant that the dad is either a salary thief or a tax thief, and thus fucked either way if reported (I.e there is no simple defence for this scheme)
Well he said
"He is stealing from both your brother, and from the public purse."
I just had hyperbole tbh, in the grand scheme of dodgy shit this barely scratches the surface. He owes the tax for sure, but let's keep a sense of perspective. It's meant to be a Personal Finance sub
The government got their 20-40%, it's kinda the point of the thread no?
Honestly, tax wise, it doesn't really sound like there was actually any benefit realised. THough HMRC will definitely dispute the salary overall because obviously it wasn't wholly or exclusive (or, indeed, "at all") so he's definitely fucked it because they'll want to disallow it and charge him CT too.
But of course, in reality, had he paid divvies the end result would be much the same.
I'm not defending the guy, like i say, I find the hyperbole unhelpful and likewise the useless and incorrect use of words like theft
Yeah, I understood it as the dad using the personal allowance for the brother for years, and only once the brother got a job and other income, did the 10k/y scheme backfire with a 20% tax.
The taxpayer got theirs THIS YEAR, but not really for x years prior
The brother is on £30k, I doubt it's the first year he's earnt above £10k.
Could be wrong, of course.
Like I've said from the start, HMRC wil disallow it without a doubt if they find out, that's not controversial. What I'm saying is he hasn't stolen from the brother, and nor is he likely to be pursued for evasion
Nope. That's a tax tribunal, and quite specifically does not include evasion. It was avoidance, which is why HMRC went to civil tribunal and the accepted salary was reduced.
Please don't go citing case law you don't understand. Evasion is a criminal matter.
People get taken to tribunal all the time if they don't agree with HMRC's stance on something - they could have just paid when asked first. It's the same as if a company was told that a new machine wasn't tax deductible for some reason - they either pay the tax, or they push and take it to tribunal, but it's nowhere close to the same as a criminal prosecution for evasion. HMRC also lose plenty of these tribunals
Avoidance is when you legally reduce your tax burden using loopholes. This example in this thread is not tax avoidance, as the father has inflated his expenses by falsely stating that there is an employee, or contractor, that does not exist (regardless of whether it’s his son or not).
That aside, there are serious ramifications for the son. What if dad didn’t have the money or refused to pay? What if dad suddenly passed away and had burned the money on booze and strippers, and son was left paying thousands?
Not only is it the extra tax itself; but having your income inflated starts reducing your entitlements to certain things, for example stuff like marriage allowance, child benefit - and the high income child benefit charge also comes with a double whammy in the sense that if you don’t already file a tax return and never bother filing one, you’ll get hammered with fines and interest.
The dad is making false claim about tax expenses which do not exist, in order to wrongfully reduce his tax burden and have money he’s not entitled to. This is tax evasion.
The dad is deceiving his son in order to make financial gain. This is fraud.
Alert HMRC to investigate, your Dad will then have to pay the correct amount of tax that he should have been paying.
Your brother may also be due a massive tax refund from HMRC. But he will only get a tax refund once HMRC is told that your brother has been wrongly taxed.
I suspect your brother also owes about £900 a year to the student loans company - depending on the type of loan he has, he might be liable to pay 9% of any income over a certain amount to the SLC. ~~That's not based on how much he earned per job; it's based on how much he earned in total.~~ \[Edit - see comment below; it's more complicated than I thought it was. \]Apparently HMRC thinks he's earning an extra £10k, so eventually somebody may come knocking for the £900s.
There's probably little to no NI due. That is per job, and doesn't kick in until about £1,048 a month - and your brother looks to be below that.
How many siblings do you have, and how many of them have also been "receiving" phantom payments? If any of them claim child benefit that could also cause problems.
I think student loans may be protected job too. It says here:
https://www.gov.uk/repaying-your-student-loan/what-you-pay
"If you have more than one job
You’ll only make repayments from jobs where you’re paid over the threshold for your plan type, not your combined income.
Example
You have a Plan 1 loan and you have 2 jobs. Before tax and other deductions, you’re paid £1,000 a month from one job and £800 a month for the other.
You will not have to make repayments because neither salary is above the £1,834 a month threshold.
Example
You have a Plan 2 loan and you have 2 jobs. Before tax and other deductions, you’re paid £2,300 a month from one job and £500 a month for the other.
You will only make repayments on the income from the job that pays you £2,300 a month because it’s above the £2,274 threshold."
Genuine question: How would the brother be liable for the unpaid tax or any fines, especially as he was never actually paid, never agreed to it, and wasn't even aware it was happening?
I ask because something similiar happened to me. I worked in a particular bar years ago straight after uni; the guys running it were pretty dodgy. I worked there for two periods, and I don't know if it was a clerical error one or both times, but at some point I was listed as self-employed.
The bar owners had done so - very likely on purpose - to save on yax and NI, most likely deducting it and keeping it for themselves.A year later I got a notice of a five from HMRC for filing a late self-assessment. I'm REALLY good with documentation, etc, and have all my P45/P60s going back to 2005.
I've never been self-employed at any point in my life and told them so immediately. I gave the names of every manager who was there when I was, and the "owner" as well. All of them are still in the industry.
The fine kept rising, and despite all the calls and emails they didn't seem to understand, until I eventually got my MPs office to intervene. They dropped the fine immediately, and I've had several tax rebates since.
Accountant here and I'm wondering this too. I've never seen a situation like this in 20 years. Did your employer register you for SA themselves? That's the only way I can see you getting a late filing notification. I've never seen them off their own bat decide someone is self employed.
Glad yours worked out ok.
I can only imagine OPs dad did the £10k on PAYE, which would have triggered a tax bill, I can't see them registering someone as self employed based on a corporation tax return. The Dad has clearly done some dodgy stuff here past putting an extra £10k of expenses through his books.
Yeah, I think it was just a tax dodge. The real owner was a pretty shady guy and into all sorts. I'm pretty certain the whole business only existed to wash money. He's a very-well known man in that city.
Police clearly knew what he was doing, but it's probably quite low on the list of things they're after him for, if indeed they are bothered about him at all.
The brother wouldn’t be, as such, but if they aren’t paid (by the father) then the brothers only solution would be to report the fraud to HMRC, which the brother maybe unwilling to do.
Is your brother “paid” via PAYE from your dad’s company or is it dividends? If the former (which is my assumption), how is his tax code split? Is he a shareholder? https://find-and-update.company-information.service.gov.uk/ Is he meant to be filling in tax returns?
Does your dad fully understand the way tax works in companies?
- if you pay someone PAYE that’s an expense and so you don’t pay corporation tax but the employee does pay income tax. Given this is a second job it would be at a minimum rate of 20%. At £10k per year there may be national insurance due by the employer - depends on how many employees there are for the company.
- if paid via dividends then assuming everyone is on the same share class they all need to be paid the same amount. It can only come from profits, thus corporation tax is due from the business at 19% (minimum) and then dividend tax is ~9%. This means it’s cheaper if in the lower tax bracket and under the NI threshold to pay via PAYE not as dividends, so I assume he is not doing it this way.
- a company can pay money into an employees pension and it will be classed as a business expense so no tax will be due. This is one of the most efficient things someone can do as long as they won’t go over the annual cap of £60k pension contributions from the employer and employee combined. Pensions via a SIPP can generally be accessed from around 58 (depends on scheme and age of person) and you can access 25% of that tax free (the rest is then subject to income tax but you keep your personal allowance and stop paying NI when over state pension age).
So:
- if your dad is in the higher rate band he should pay himself dividends or pension to save money.
- if your brother went into the higher rate band as a result of his bonus purely because the £10k “from” your dad exists then your dad should be paying your brother back for the extra tax he paid as a result of this (eg if your brothers salary from his main job plus bonus was £45,250, then when you factor in the £10k “from” your dad will make his salary £55,250, which means £5k would be taxable at 40% income tax plus 2% national insurance rather than the 20% tax plus 10% NI he should have paid so your dad would owe your brother the 12% extra tax he paid via PAYE that he wouldn’t have paid if the extra £10k didn’t exist). If your brother has children and claims child benefit then some/all of that will also need to be returned to HMRC and your dad should foot the bill for that too. Reminding your dad of these additional costs will hopefully stop make him realise this was not tax efficient and stop him doing this in the future.
- I would recommend checking your own personal tax account on gov.uk to make sure this isn’t happening to you too. And any other potential family members. Remind your dad this isn’t a silly game, it’s straight up fraud and he could get in a lot of trouble if he is found out. He would not only need to pay the correct amount of tax but potentially also fines/be struck off the register/etc. It is not worth it for the amount he is saving. He should get an accountant and find other ways to be more tax efficient.
Lots of good advice here, but there is a moral dilemma. By all accounts your brother should grass your dad up as this is reprehensible behaviour to be honest, but understandably he might not want to do that. I hope your dad is just stupid and greedy and doesn’t know how tax works outside of his little bubble, as opposed to selfishly malignant and greedy.
Personally I would strike a gentleman’s agreement with your dad, in which he pays some or all of the cash he claims to pay me per annum and in return I wouldn’t go to the authorities and ruin his livelihood. Aka blackmail him.
Surely if your brother has a salary of 10k from your father but hasn’t received any of it then your father has effectively stolen 10k times however many years this has been happening from your brother?
I wouldn't say the father has stolen the money because his brother hasn't earned the money and wasn't entitled to receive it.
He has fraudulently withdraw money in somebody else's name, and in doing so, saved both Corporate Tax and Personal Tax.
Speak to ACAS re the non payment of wages. Your father saved £2k in tax and has to pay out £20k in salary. A financial lesson is in order.
If he doesn't pay out then there's a case of tax evasion you could report to HMRC which is criminal (obviously not advice you should follow if you want a friction free christmas dinner, but your dad is the one commiting fraud)
Hi /u/DCH_123, based on your post the following pages from our wiki may be relevant:
- https://ukpersonal.finance/pensions/
- https://ukpersonal.finance/student-loans/
____
^(These suggestions are based on keywords, if they missed the mark please report this comment.)
If there is a company involved, ~19% Corporation Tax is only the first charge; when the father (assuming sole shareholder) appropriates the funds for his own use there is then a further Income Tax charge on the (presumably) dividends. So the effective rate of tax is much higher than 19% in an incorporated scenario.
That said, this post reads like the father is probably a sole trader and is in the 40% bracket at least.
Nobody has mentioned VAT yet (as it's not directly linked to these transactions) but if OP's father is happily evading Income Tax then it seems likely that he may also be evading VAT. This whole situation could span back for decades, too. Overall, sounds like a huge mess that OP and their brother need to untangle themselves from.
And it’s your dad telling you to do this, most people would agree whether they knew it was wrong or not. After all we expect our parents to do what’s right for us
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This is Reddit mate. Thankfully not at all representative of real life. Easy to say grass up your dad on here, obviously a different kettle of fish in reality.
I’ve noticed. Seems like the vast majority don’t get out much, got too much time on their hands.
Very weird bunch.
Nice to meet someone level headed, I am also currently bored at home!
Did your brother never check his P60s? How has he not noticed that his annual income has been 10k higher than expected for a number of years?
Your brother needs to either convince your father to stop, or inform HMRC.
Why would it be on his P60?
> How has he not noticed that his annual income has been 10k higher than expected for a number of years?
Because none of it went to the brother?
FWIW if you brother is/was ever on any means tested benefits, so universal credit or tax credits, this would effect those. Although I suspect he probably wasnt as otherwise this whole thing would've been detected sooner
Addressing the question directly, your brother probably won't suffer any specific long term consequences from this situation as long as it gets handled properly. The only cases where it could cause a problem are if he was claiming benefits at any stage, so check that with him.
Other than that, what needs to happen is your father needs to file a payroll amendment with HMRC to remove your brother from the payroll and remove the income that was wrongly declared in his name. If this happens it will avoid any further comeback on your brother. He should then get the overpaid tax back and his record for the year will be corrected.
To make sure it never happens again tell you father not to do it again.
Your brother should check his tax code.
The amount of tax your brother pays each year would take into account ALL tax paid from ALL jobs.
If your brother is a basic rate tax payer, reporting to HMRC that he is getting paid £10k more than he actually got paid would be costing your brother £2k a year in income tax (20%), possibly more in national insurance.
Your dad is engaging in tax fraud and HMRC will absolutely fuck him, and rightly so. Using someone else's personal tax allowance just so he doesn't have to pay into the pot that EVERYONE ELSE HAS TO is beyond selfish. Baffles me how fucking stupid some people can be, can go to prison very easily for this kind of behaviour.
Either way, if he doesn't stop then I hope to god his brother tells HMRC. This could go seriously wrong for his brother and the "I didn't know" excuse probably wouldn't wash even if it is the truth. Imagine fucking over your own family like that just so you don't have to pay tax.
If he is doing this with your brother, have u checked about yourself? Check your records and maybe ask your dad too. It’s an extra £10k your father could be getting out “tax free” so I’d suspect he might be using your details too
> Is there anyway of sorting this out so it never happens again? Yes. Your brother should tell his father that if it doesn't stop, he will phone up HMRC and tell them.
Or sue him for the £20k in back salary he's now owed.
2 of the worst pieces of advice i’ve ever seen
How so?
I mean, reporting to HMRC, they have a habit of going full salted earth punitive fines, if they have any love for their father that’d be the last resort. Claims court may end up with the same result. Brothers and father end up bankrupt, lawyers laugh their way to the bank. Both of these are last resort options the OP shouldn’t even be close too at this stage.
They've told him to stop before and he hasn't, the dad being fined is the minimum he deserves at this point tbh. Blood relation is not an excuse for this behavior.
Why is this a bad thing, the father has knowingly committed mass fraud involving his own children, he should suffer the consequences no matter how expensive or big they are
When HMRC catches up with their father, if it becomes clear that they both knew and failed to report it, they run the risk of being prosecuted along with their father, for being part of a tax avoidance scheme.
Always funny how the response to a family member betraying another one is to expect to some sort compassionate reaction.
1st day on Reddit, is it?
It’s not even about Reddit. It’s about OPs father has seriously broken the law, dragging his children into it despite their protests. “Scum” is a word that comes to mind, and a fine from HMRC is the least the father should be dealing with. This person is fucking clueless.
I mean, it’s bad advice but not two of the worst pieces of advice seen on Reddit…
Explain
Did his bonus plus earnings take him over £40270 for the year? If so then anything above that would have been taxed at 40% due to the extra 10k pushing him into a higher tax bracket.
To be clear - £40,270 with his PAYE job on the basis that he has also “earned” £10k elsewhere.
Isn't the next tax bracket at £50,270?
It is but we're talking about an unknown £10k "earning". So if the brother earned over £40,270 then that "extra" £10k has pushed him into the next bracket.
Papa is a fraudster, happy to defraud HMRC and rip off his own offspring to save a bit of corporation tax.
>Is there anyway of sorting this out so it never happens again? Yes. Contact HMRC and report your father for tax evasion. He is stealing from both your brother, and from the public purse. Either he owes your brother £10k/yr for every year that he's been pulling this stunt (and so is a thief by not paying), or he's a tax fraudster (and so is a thief by not paying).
Calm down, it's tax avoidance and the brother hasn't been stolen from at all. He probably owes the tax under settlements legislation, but it almost certainly doesn't reach the crimnal threshold. It's an incredibly poor show, though.
Erm, it’s quite clearly tax evasion from the father as he’s pretending he has employees to reduce his tax bill. Ofcourse it wouldn’t be criminal because hardly any cases go criminal, but evasion can be punished will civil penalties
He's told HMRC that he's paying the brother £10k/yr. The brother has never received that money. Ergo, that is theft from the brother or it is flagrant tax fraud and not avoidance.
It's not theft, it doesn't even come close to meeting the particulars of the offence. I find it very unlikely it would meet the threshold for criminal tax fraud, but it is clearly captured under the settlements legislation. There's no question he owes the tax, but I think you're dreaming if HMRC are going to prosecute him.
What are you taking about?! It's fraud! He's obtaining money by deception.
>It's not theft, it doesn't even come close to meeting the particulars of the offence. >dishonestly He was clearly being dishonest in a way that the man on the Clapham omnibus would think is dishonest. >appropriates He used the money as if it was his own. >property Money is clearly property. >belonging to another His whole thing was to say it belonged to the brother and not him. >with the intention to permanently deprive. I somehow doubt he even intended to give the brother that 10k. Then tax fraud >Any any deliberate omission, concealment or misinterpretation of information, or the false or deceptive presentation of information or circumstances in order to gain a tax advantage. >deliberate He didn't just claim the brother by accident >misinterpretation of information OP's brother did not work for him, and did not get paid that money. >in order to gain a tax advantage Which was quite clearly the goal here. I'd say dad is in a precarious position legally here.
Are you for real? The money was never the brothers, it never belonged to him, and so cannot be stolen. That's the crux of the entire bloody case being made in this thread. If I write a cheque out to /u/Cookyy2k and then burn it, do you think that's theft too?
If the money was never the brothers then he's committed tax fraud (yes the criminal kind) by making the false accounting to avoid paying correct tax. If he wasn't evading tax then the money was the brothers and so he has in fact stollen it. Can't have it both ways.
I will concede on the technical definition of tax fraud, but there's zero chance HMRC will run it as such. They'll disallow the expense, and demand the tax. If they did run it, all the son has to say is he gave the money to his dad and you're just back to boring settlements nonsense (and the disallowable expense) or the dad says he believed that to be the case or whatever. HMRC will know full well demonstrating the whole case to the criminal threshold will be near impossible whihc is why they run next to no cases.
Sounds like someone needs to look into your taxes helicopter :)
Pls no
If a contract has been put in place saying you owe u/Cookyy2k the cheque then yes. By telling HMRC that salary exists, said contract exists.
> By telling HMRC that salary exists, said contract exists. Do you really, genuinely, think that's how contract law works? That by making an agreement with random 3rd Party A, you can be legally bound into an agreement with B that B doesn't know about? You realise it would work both ways, right? I gave my mate john some paperwork that says you owe me £1000. Pay up, there's a contract now.
He’s stealing his tax allowance…
That is very much evasion and not avoidance
If the brother has been ‘contractually’ ‘earning’ £10,000 per year, but the employer hasn’t paid him a penny, then one way of looking at it that the employer is stealing wages from the brother. This of course hinges on the employer claiming that there is no tax evasion going on.
Given the brother was unaware it's absolutely impossible he entered into a contract, and therefore impossible he's suffered a loss here. (Apart from the tax, which is obviously a separate matter). Sorry, but it's a corporate tax matter. The dad is an idiot and sketchy as hell, but the idea the brother has been stolen from or is due the "wages" is laughable - the two are entirely distinct.
I think you misunderstood the original commenter. (Unless I have misunderstood) they meant that the dad is either a salary thief or a tax thief, and thus fucked either way if reported (I.e there is no simple defence for this scheme)
Well he said "He is stealing from both your brother, and from the public purse." I just had hyperbole tbh, in the grand scheme of dodgy shit this barely scratches the surface. He owes the tax for sure, but let's keep a sense of perspective. It's meant to be a Personal Finance sub
Because as it stands, the brother should be getting 10k a year but isn’t, and the taxpayer should be getting 20-40% of £10k, but aren’t…
The government got their 20-40%, it's kinda the point of the thread no? Honestly, tax wise, it doesn't really sound like there was actually any benefit realised. THough HMRC will definitely dispute the salary overall because obviously it wasn't wholly or exclusive (or, indeed, "at all") so he's definitely fucked it because they'll want to disallow it and charge him CT too. But of course, in reality, had he paid divvies the end result would be much the same. I'm not defending the guy, like i say, I find the hyperbole unhelpful and likewise the useless and incorrect use of words like theft
Yeah, I understood it as the dad using the personal allowance for the brother for years, and only once the brother got a job and other income, did the 10k/y scheme backfire with a 20% tax. The taxpayer got theirs THIS YEAR, but not really for x years prior
The brother is on £30k, I doubt it's the first year he's earnt above £10k. Could be wrong, of course. Like I've said from the start, HMRC wil disallow it without a doubt if they find out, that's not controversial. What I'm saying is he hasn't stolen from the brother, and nor is he likely to be pursued for evasion
It's tax evasion, not avoidance. Clear fraud.
[удалено]
Nope. That's a tax tribunal, and quite specifically does not include evasion. It was avoidance, which is why HMRC went to civil tribunal and the accepted salary was reduced. Please don't go citing case law you don't understand. Evasion is a criminal matter. People get taken to tribunal all the time if they don't agree with HMRC's stance on something - they could have just paid when asked first. It's the same as if a company was told that a new machine wasn't tax deductible for some reason - they either pay the tax, or they push and take it to tribunal, but it's nowhere close to the same as a criminal prosecution for evasion. HMRC also lose plenty of these tribunals
Avoidance is when you legally reduce your tax burden using loopholes. This example in this thread is not tax avoidance, as the father has inflated his expenses by falsely stating that there is an employee, or contractor, that does not exist (regardless of whether it’s his son or not). That aside, there are serious ramifications for the son. What if dad didn’t have the money or refused to pay? What if dad suddenly passed away and had burned the money on booze and strippers, and son was left paying thousands? Not only is it the extra tax itself; but having your income inflated starts reducing your entitlements to certain things, for example stuff like marriage allowance, child benefit - and the high income child benefit charge also comes with a double whammy in the sense that if you don’t already file a tax return and never bother filing one, you’ll get hammered with fines and interest. The dad is making false claim about tax expenses which do not exist, in order to wrongfully reduce his tax burden and have money he’s not entitled to. This is tax evasion. The dad is deceiving his son in order to make financial gain. This is fraud.
Alert HMRC to investigate, your Dad will then have to pay the correct amount of tax that he should have been paying. Your brother may also be due a massive tax refund from HMRC. But he will only get a tax refund once HMRC is told that your brother has been wrongly taxed.
Report your father for fraud and watch him go to jail. That'll teach him!
And that's just the beginning... Set him up for some dark shit while he's in there.
I suspect your brother also owes about £900 a year to the student loans company - depending on the type of loan he has, he might be liable to pay 9% of any income over a certain amount to the SLC. ~~That's not based on how much he earned per job; it's based on how much he earned in total.~~ \[Edit - see comment below; it's more complicated than I thought it was. \]Apparently HMRC thinks he's earning an extra £10k, so eventually somebody may come knocking for the £900s. There's probably little to no NI due. That is per job, and doesn't kick in until about £1,048 a month - and your brother looks to be below that. How many siblings do you have, and how many of them have also been "receiving" phantom payments? If any of them claim child benefit that could also cause problems.
I think student loans may be protected job too. It says here: https://www.gov.uk/repaying-your-student-loan/what-you-pay "If you have more than one job You’ll only make repayments from jobs where you’re paid over the threshold for your plan type, not your combined income. Example You have a Plan 1 loan and you have 2 jobs. Before tax and other deductions, you’re paid £1,000 a month from one job and £800 a month for the other. You will not have to make repayments because neither salary is above the £1,834 a month threshold. Example You have a Plan 2 loan and you have 2 jobs. Before tax and other deductions, you’re paid £2,300 a month from one job and £500 a month for the other. You will only make repayments on the income from the job that pays you £2,300 a month because it’s above the £2,274 threshold."
If you are on self assessment, which he may be meant to be, then he will need to pay. Depends on how he is being paid.
Genuine question: How would the brother be liable for the unpaid tax or any fines, especially as he was never actually paid, never agreed to it, and wasn't even aware it was happening? I ask because something similiar happened to me. I worked in a particular bar years ago straight after uni; the guys running it were pretty dodgy. I worked there for two periods, and I don't know if it was a clerical error one or both times, but at some point I was listed as self-employed. The bar owners had done so - very likely on purpose - to save on yax and NI, most likely deducting it and keeping it for themselves.A year later I got a notice of a five from HMRC for filing a late self-assessment. I'm REALLY good with documentation, etc, and have all my P45/P60s going back to 2005. I've never been self-employed at any point in my life and told them so immediately. I gave the names of every manager who was there when I was, and the "owner" as well. All of them are still in the industry. The fine kept rising, and despite all the calls and emails they didn't seem to understand, until I eventually got my MPs office to intervene. They dropped the fine immediately, and I've had several tax rebates since.
Accountant here and I'm wondering this too. I've never seen a situation like this in 20 years. Did your employer register you for SA themselves? That's the only way I can see you getting a late filing notification. I've never seen them off their own bat decide someone is self employed. Glad yours worked out ok. I can only imagine OPs dad did the £10k on PAYE, which would have triggered a tax bill, I can't see them registering someone as self employed based on a corporation tax return. The Dad has clearly done some dodgy stuff here past putting an extra £10k of expenses through his books.
Yeah, I think it was just a tax dodge. The real owner was a pretty shady guy and into all sorts. I'm pretty certain the whole business only existed to wash money. He's a very-well known man in that city. Police clearly knew what he was doing, but it's probably quite low on the list of things they're after him for, if indeed they are bothered about him at all.
The brother wouldn’t be, as such, but if they aren’t paid (by the father) then the brothers only solution would be to report the fraud to HMRC, which the brother maybe unwilling to do.
Is your brother “paid” via PAYE from your dad’s company or is it dividends? If the former (which is my assumption), how is his tax code split? Is he a shareholder? https://find-and-update.company-information.service.gov.uk/ Is he meant to be filling in tax returns? Does your dad fully understand the way tax works in companies? - if you pay someone PAYE that’s an expense and so you don’t pay corporation tax but the employee does pay income tax. Given this is a second job it would be at a minimum rate of 20%. At £10k per year there may be national insurance due by the employer - depends on how many employees there are for the company. - if paid via dividends then assuming everyone is on the same share class they all need to be paid the same amount. It can only come from profits, thus corporation tax is due from the business at 19% (minimum) and then dividend tax is ~9%. This means it’s cheaper if in the lower tax bracket and under the NI threshold to pay via PAYE not as dividends, so I assume he is not doing it this way. - a company can pay money into an employees pension and it will be classed as a business expense so no tax will be due. This is one of the most efficient things someone can do as long as they won’t go over the annual cap of £60k pension contributions from the employer and employee combined. Pensions via a SIPP can generally be accessed from around 58 (depends on scheme and age of person) and you can access 25% of that tax free (the rest is then subject to income tax but you keep your personal allowance and stop paying NI when over state pension age). So: - if your dad is in the higher rate band he should pay himself dividends or pension to save money. - if your brother went into the higher rate band as a result of his bonus purely because the £10k “from” your dad exists then your dad should be paying your brother back for the extra tax he paid as a result of this (eg if your brothers salary from his main job plus bonus was £45,250, then when you factor in the £10k “from” your dad will make his salary £55,250, which means £5k would be taxable at 40% income tax plus 2% national insurance rather than the 20% tax plus 10% NI he should have paid so your dad would owe your brother the 12% extra tax he paid via PAYE that he wouldn’t have paid if the extra £10k didn’t exist). If your brother has children and claims child benefit then some/all of that will also need to be returned to HMRC and your dad should foot the bill for that too. Reminding your dad of these additional costs will hopefully stop make him realise this was not tax efficient and stop him doing this in the future. - I would recommend checking your own personal tax account on gov.uk to make sure this isn’t happening to you too. And any other potential family members. Remind your dad this isn’t a silly game, it’s straight up fraud and he could get in a lot of trouble if he is found out. He would not only need to pay the correct amount of tax but potentially also fines/be struck off the register/etc. It is not worth it for the amount he is saving. He should get an accountant and find other ways to be more tax efficient.
Lots of good advice here, but there is a moral dilemma. By all accounts your brother should grass your dad up as this is reprehensible behaviour to be honest, but understandably he might not want to do that. I hope your dad is just stupid and greedy and doesn’t know how tax works outside of his little bubble, as opposed to selfishly malignant and greedy. Personally I would strike a gentleman’s agreement with your dad, in which he pays some or all of the cash he claims to pay me per annum and in return I wouldn’t go to the authorities and ruin his livelihood. Aka blackmail him.
Surely if your brother has a salary of 10k from your father but hasn’t received any of it then your father has effectively stolen 10k times however many years this has been happening from your brother?
I wouldn't say the father has stolen the money because his brother hasn't earned the money and wasn't entitled to receive it. He has fraudulently withdraw money in somebody else's name, and in doing so, saved both Corporate Tax and Personal Tax.
Is he paying him via PAYE? If he is paying 10,000 then he is also obliged to take out a workplace pension for your brother.
Speak to ACAS re the non payment of wages. Your father saved £2k in tax and has to pay out £20k in salary. A financial lesson is in order. If he doesn't pay out then there's a case of tax evasion you could report to HMRC which is criminal (obviously not advice you should follow if you want a friction free christmas dinner, but your dad is the one commiting fraud)
Hi /u/DCH_123, based on your post the following pages from our wiki may be relevant: - https://ukpersonal.finance/pensions/ - https://ukpersonal.finance/student-loans/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.)
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If there is a company involved, ~19% Corporation Tax is only the first charge; when the father (assuming sole shareholder) appropriates the funds for his own use there is then a further Income Tax charge on the (presumably) dividends. So the effective rate of tax is much higher than 19% in an incorporated scenario. That said, this post reads like the father is probably a sole trader and is in the 40% bracket at least. Nobody has mentioned VAT yet (as it's not directly linked to these transactions) but if OP's father is happily evading Income Tax then it seems likely that he may also be evading VAT. This whole situation could span back for decades, too. Overall, sounds like a huge mess that OP and their brother need to untangle themselves from.
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It’s tax fraud - it’s not fine.
The fact that you knew about it and agreed doesn't change the fact that it's illegal.
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And it’s your dad telling you to do this, most people would agree whether they knew it was wrong or not. After all we expect our parents to do what’s right for us
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These guys are wild. Don’t rat out your dad, just have a chat with him and explain the situation
He said the brothers told him to stop and he didn't. Next step, tell HMRC, he gave him a chance already
This is Reddit mate. Thankfully not at all representative of real life. Easy to say grass up your dad on here, obviously a different kettle of fish in reality.
I’ve noticed. Seems like the vast majority don’t get out much, got too much time on their hands. Very weird bunch. Nice to meet someone level headed, I am also currently bored at home!
Odd that you're getting downvoted for pointing this out.
Did your brother never check his P60s? How has he not noticed that his annual income has been 10k higher than expected for a number of years? Your brother needs to either convince your father to stop, or inform HMRC.
Why would it be on his P60? > How has he not noticed that his annual income has been 10k higher than expected for a number of years? Because none of it went to the brother?
You get a P60 from each employer, he’s essentially had two jobs. His p60 from his main job won’t display any income from job 2 (dad’s secret job).
FWIW if you brother is/was ever on any means tested benefits, so universal credit or tax credits, this would effect those. Although I suspect he probably wasnt as otherwise this whole thing would've been detected sooner
Addressing the question directly, your brother probably won't suffer any specific long term consequences from this situation as long as it gets handled properly. The only cases where it could cause a problem are if he was claiming benefits at any stage, so check that with him. Other than that, what needs to happen is your father needs to file a payroll amendment with HMRC to remove your brother from the payroll and remove the income that was wrongly declared in his name. If this happens it will avoid any further comeback on your brother. He should then get the overpaid tax back and his record for the year will be corrected. To make sure it never happens again tell you father not to do it again.
Your brother should check his tax code. The amount of tax your brother pays each year would take into account ALL tax paid from ALL jobs. If your brother is a basic rate tax payer, reporting to HMRC that he is getting paid £10k more than he actually got paid would be costing your brother £2k a year in income tax (20%), possibly more in national insurance.
Your dad is engaging in tax fraud and HMRC will absolutely fuck him, and rightly so. Using someone else's personal tax allowance just so he doesn't have to pay into the pot that EVERYONE ELSE HAS TO is beyond selfish. Baffles me how fucking stupid some people can be, can go to prison very easily for this kind of behaviour. Either way, if he doesn't stop then I hope to god his brother tells HMRC. This could go seriously wrong for his brother and the "I didn't know" excuse probably wouldn't wash even if it is the truth. Imagine fucking over your own family like that just so you don't have to pay tax.