Husband working for nothing!

Emrhino

Hi all,

Bit of advice needed here please:

I have a client who runs a fish & chip shop and is having a hard time of it - running at a loss and having to sell house to make ends meet.

Her husband currently works about 20 hours in the shop for nothing - she also has 2 employees who are paid minimum wage.

While hubby should really be emplyed and paid NMW which could be set off as a wages expense ( and I think it would be sensible to pay him over the LEL), the cash just isn't there to physically pay him.

Any advice on the best way to cover all basis would be much appreciated. I am assuming we can't set up a 'loan' account for him?

Any tips gladly received as always!!

Emma

Monsoon

Partnership? If it's making a loss, then presumably the tax bill isn't an immediate consideration?

Emrhino

Yes, Monsoon, the tax bill is the least of her worries - she's more worried of falling foul of employment law I think!

Partnership would be a good suggestion - he would pay Class 2 NICS then as well to protect his benefits.

Think I might broach that with her though she's been reluctant to involve him in running the business before now.

Monsoon

I don't think you have a problem with employment law. He's a family member doing voluntary work. You would actualy make more of a problem declaring wages that weren't paid.

Is the business a going concern? If it's loss making, will it turn around and is it worth continuing? If running the business is getting them into more debt, might they be better off closing it?

Emrhino

Client is determined to keep at it - they have only been going since April but the outlook doesn't look great to me.

She has now taken on a job to help support the family and it looks like she is going to increase her hours on that front - they really seem set on trying to make a go of the shop.

They are even considering buying the premises they currently rent but how they think they're going to get a mortgage for it I don't know.

I have advised her to speak to an IFA.

They are also currently receiving Working Tax Credits on the basis that he works over 16 hours a week - I am just wondering whether there is any problem with the fact that he is not actually receiving payment for this?!

Monsoon

Ah, it's a new business. I don't know why, I thought it was an existing one.

Re WTC, I think he'd need to be self employed (i.e. in partnership) for this to work. I'm not 100% sure though.

Emrhino

Yes, I am thinking a partnerships probably a good idea really.

Anyway, thanks for your help, Mosoon - always good to run things past someone else now and then!

:-)

Emma

T.C.

I would go partnership. Don't forget working tax credits for them!