Without trying to make this complicated I helped financially support a friends Ltd, in which he has salaried staff.

I am in no way shape or form legally attached to the business and the business that supported it financially is based in Canada.

Unfortunately my friend had scant regard for the cashflow of the business and felt it his right to take the monies for himself. Our support for the business had to cease and fortunately the payment we had sent on Saturday to his business we managed to get back today before it landed in the UK and then we’d have lost the £££.

The payment was to cover the staffs net salaries.

Whilst his business owes us considerably more than the net salaries we want to ensure the staff receive their net salaries and don’t know the best way to achieve this. They are on a PAYE system with his business, he isn’t answering call BUT I do have copies of there payslip due 25th May.

I have an Ltd in the UK which has some fund I could use to pay them and whilst I can speak to my accountant he told me months ago to not get involved with helping this other business (he was right!).

I can’t ignore the fact these people need paying, I cannot ignore them like he is and tell them “speak to xxx”.

So is anyone aware of a way I can pay them?

I know its a bizarre question but here seems the place for some “out there” post, I’m trying to make sure they are treated properly. I might have got 2 of them jobs and that company might be able to “golden handshake” them.

Thanks for any help.

MT

Lend them the money – simple short note for them to sign on handover saying that they will repay you when (if?) they get paid.

OK thank you ninfan, I guess I’ll need to speak to my accountant.

Do speak to your accountant but also question why you are doing this and how you are going to control how those funds are routed to staff.

If there is no money to pay salaries on the due date you may be about to loan money to someone who will never have the capacity to pay it back. What are the consequences of that for your company/finances?

Yeah was going to say this is a gift/write off isn’t it. If you really want to do that you could get in touch with one of them via mail or linked in etc and speak to somebody directly.

Won’t you also need to pay NI to HMRC? How would that work?

(Not to mention you might be on the hook to give them a P45 of some sort as well).

think should be concerned about being considered a ‘shadow director” during insolvency proceedings – especially if you pay “net” salaries and don’t meet tax liabilities – remembering which bodies come high in the list of those interested in assets – your concerns may be well intentioned but your accountant is probably hard nosed and looking at your interests

(not a lawyer or accountant)

It sounds as though the business is insolvent – your friend probably needs to speak to an insolvency practitioner sooner rather than later.

It’s laudable that you’re trying to do the best for the employees – they will all have mortgages, rent, living costs and whatever else they need to meet and have a reasonable expectation of being remunerated for according to their contracts of employment, but the risk is that you’ll end up taking on the company’s debt.

Also, if your friend has taken the cash for salaries and spluffed it on themselves, then your friend is an utter dick IMHO.

Sounds like a gift of some cash (i.e. not a salary) that goes directly from you/your business to his staff?

Have you got everyone’s payslips? Send cheques/BACS for appropriate amounts. Its up to you who you send your money to, and keeps it away from matey boy. Also, since it’s not wages PAYE won’t apply. That’s between him and the staff.

I can’t imagine circumstances where you are going to see any of this back.

Fair play for trying to help.

The problem is that you can’t get away with paying staff net and withholding tax and NICs from HMRC for long. I would imagine that pensions would be a factor too.

Fair point – I read it as a one-off to see them through jumping ship. I’ve got a bit lost about who’s who – are the Canadians sending the money?

I thought the OP was talking about a one-off payment to cover the last monthly pay they would otherwise likely be screwed out of (as a good Samaritan rather than a temporary loan).

As others have said you really need an accountant/lawyer for this, on the one hand as you have the May payslips (so you know their addresses and how much to pay them to cover their lost salary) it would seem simple enough to send out a bunch of cheques but on the other hand as people have mentioned there could be a whole lot of legal issues you open yourself up to by doing so

The company need an administrator; they’ll sort out wages owed etc. If the business is insolvent they will open a case that will allow for Govt paid redundancy etc.

Your ‘friend’ needs a good kick up the arse for good measure.

I get that you might want to check about the tax implications, but given that it sounds like you are not expecting to get this money back through whatever bankruptcy process comes next it seems like the easiest way to accomplish this would be through PayPal gift. Can you get all the employees personal e-mail addresses?

And you sound like a thoroughly decent chap too. Nice one.

Thanks for the messages.

I’ve spoken to my accountant and he suggested the government scheme but they need their money tomorrow, well in principle they do. I’m not happy to brush them off with that.

The solution is I will loan the monies to the business that cannot pay the net salaries. The loan will be paid directly to the employees. The loan is highly likely to not be repaid so my business will pay corp tax on this.

I am being honest with all the staff re the NI and saying that needs to be handled by the business they are employed by.

I was concerned about the “shadow director” thing and I think I will just have to cross that bridge as and when it happens. The liabilities are minimal as of the date staff “left” but now I’m thinking there is potential Corp Tax, silly OS bills etc.

I really appreciate the comments, I’m trying to do the right thing by the employees, I was trying to help a friend now I’m not sure if I crossed the line in terms of his operation.

I’ll speak to my accountant again re the gift idea, maybe I’m I could be implicated enough as it is. What a mess, his golden opportunity has turned into a pile of Sh!t so quickly. Would be typical that he coudl walk away and I end up paying all remaining bills etc

Learnt my lesson thats for sure.

Thanks again its really appreciated

OP although admorable, and ensuring workers get paid, what is the payment going to achieve?

It means that the company will probably operate for 1 month longer in which time your ‘friend’ can bleed more money out of it. In essence your are covering up his mistakes.

Is it the business isnt viable or just that its run by a d!ck?

Also, if your friend has taken the cash for salaries and spluffed it, then your friend is an utter dick IMHO

Offering a loan seems a reasonable plan, that way the NI/tax responsibility remains with the other company and gets added to the list of creditors.

I hope that your generosity is repaid somehow, you’re going above and beyond to help people who have otherwise been shafted by their employer and you/your company have taken additional cost to do so.

Your friend is an ar$e though.

FunkyDunc

The staff are all leaving, the payment is strictly to them and them alone.

They are aware of his mistakes he even text the office to say they should leave for the day and he’d be in touch, he hasn’t and one is his sister.

They business was VERY viable, run by a dick!

ctk:

er he paid himself more than maybe he should! Its absolutely nuts, and an appalling way to behave. Whilst they could take legal action against him simple fact is if he has nothing and they need to pay their bills tomorrow. In hindsight I should have set the business up instead we let him do it his way offering him advice etc where needed, we live and learn eh!

although what you are trying to do is admirable my recommendation would be to walk away completely from this. you are not on the hook for this at all.

There are tried and trusted laws/procedures in place for all this.

you will only get dragged in deeper and deeper and end up putting your own business, health, relationship at risk.

And you sound like a thoroughly decent chap too. Nice one.

This +1.

If the business is very viable and you are paying the staff already…

As others have said, it’s a very generous thing you are doing. I’m also a LTD and in your shoes I would possibly take the money out of the Canadian business (get stung for the tax) and then make a personal payment to each of the employees. This should protect you from HMRC and any liability in the future.

Also, do the employees NEED the money? Some may have savings and working partners that can see them through. You’re generosity and conscience may be costing you more than is necessary. Honourable as it is, it may not be necessary.

Well what a day, thanks again for all the replies.

Decision is to loan each employee money. I will not be paying their net salaries.

The loan ONLY becomes repayable if/when they receive their salaries.

Hopefully removes any pressure from them in this situation, avoids me paying their salary which I have zero obligation to do. It is my decision to loan them the money and the only condition of the repayment is a fair one.

Thanks again, sadly I hear the AWOL director was busy “getting off his head” with company in his apartment. Quite a contrast to my day! He’s in for a rude awakening 😉