is this legally or morally right

[Tom Cornwall]

Is it legally, or even morally right, that the owner of a company should be able to take money from the company to buy a country mansion, take money to refurbish it, furnish it lavishly, buy cars, holidays, fly by helicopter all over the country, while very rarely being seen in the company. Putting a pay-freeze on the company’s employees for the last two years and into the future, because ‘the company can’t afford it’….surely this can’t be right. The company has apartments abroad, which he uses free. They are available for the staff to use, but they can’t because the cost to them would be exorbitant…what do you think?

[octane]

Exploiting loopholes probally and if its his company then they can do what they want. As for pay freeze they are not legally oblidged to put up the rates each year which is usually below the inflation rate too.

Employees to all these fat cats are just 10 a penny to them and the best option is to move on to something else if your fortunate to be in that position.

[NickInTheNorth]

Legal - certainly most financial pratices of company owners can be made that way if the lawyers and accountants are good enought

Moral - well there is another question.

Ever since the only real duty placed on the directors of companies in the UK was to maximise profits I am afraid that morals went out the window as a business practise.

[rob1]

I don't know. My first thought was 'whats the problem.. its technically thier money'. But then I thought that if this owner was paying him/herself a salary then they would be getting taxed and in order to buy all the things you say they have, they would need a big wage therefore 40% tax bracket. If they are just helping themselves to the company accounts for these things and they are registered under a person for personal use rather than company owned, then maybe and I stress maybe, that is tax evasion.

[rob1]

oh yeah, forgot about the pay freeze bit. Well thats just selfish.

[Green_not_greed]

Is it legally, or even morally right, that the owner of a company should be able to take money from the company to buy a country mansion, take money to refurbish it, furnish it lavishly, buy cars, holidays, fly by helicopter all over the country, while very rarely being seen in the company. Putting a pay-freeze on the company’s employees for the last two years and into the future, because ‘the company can’t afford it’….surely this can’t be right. The company has apartments abroad, which he uses free. They are available for the staff to use, but they can’t because the cost to them would be exorbitant…what do you think?

Umm - is he an MP?

[Invisible]

Umm - is he an MP?

i was thinking the same thing

[MrsK]

Doesn't really matter. If the Company shareholders and directors have OK'd it and it's legal - it's nothing to do with anyone else at all.

Businesses are there to create profit, how they spend it is their affair. Morality is an almost irelevant side issue.

[joxville]

Is it legally, or even morally right, that the owner of a company should be able to take money from the company to buy a country mansion, take money to refurbish it, furnish it lavishly, buy cars, holidays, fly by helicopter all over the country, while very rarely being seen in the company. Putting a pay-freeze on the company’s employees for the last two years and into the future, because ‘the company can’t afford it’….surely this can’t be right. The company has apartments abroad, which he uses free. They are available for the staff to use, but they can’t because the cost to them would be exorbitant…what do you think?
It depends on how the business is run whether he can 'take' money to buy property, because should the business fold then the property belongs to the business therefore he would lose it as it's classed as a business asset. Also, it's his company so how he sees fit to remunerate his employees is no-one else's affair.

[LMS]

If the director had put the money into the business at some stage, which is known as a 'Director's Loan', he is quite entitled to take the money out again. This is common practice rather than going to a bank where the cost of lending would be much greater and would be repayable over a set period. A Director's Loan is a much more flexible arrangement.

i.e. Fred Bloggs lends Blogg Ltd. £10,000 in 2001 to get the business going. Fred Bloggs decided in 2009 that he needs the money back, he takes back his £10,000 from Bloggs Ltd. He is quite within his rights to do so and it is his money to do with whatever he wishes. He would also be entitled to take out a salary and if the company has made sufficient profit to pay corporation tax, he is entitled to a dividend in proportion to his shareholding.

It is a fair point that a pay-freeze isn't good for employee morale but at the end of the day if so-called fat cats didn't put themselves on the line, there wouldn't be employment for a large percentage of the UK. The buck stops with the directors and they sure as anything aren't in business for a small return and to be nice - they are in it to make money. If they have the guts, know-how and business knowledge to get going they surely deserve something back, however unpalatable that may be to the workforce.

[Turquoise]

Well put LMS. There is a very definite difference between tax evasion and avoidance. Tax evasion is illegal and generally takes the form of actually not declaring to HMRC. Tax avoidance on the other hand is something which you declare on your tax return and is using tax loopholes to the benefit of the taxpayer.

There are always arguments against tax avoidance, but let's face it, most of us have to pay tax and those in the 40% tax bracket are paying a large proportion of their hard earned cash. The 40% taxpayer could be said to be subsidising for those who evade tax completely. The state of the tax system would be very different if there was no black market and we all paid what we are due to pay.

[mrjolly]

Is it legally, or even morally right, that the owner of a company should be able to take money from the company to buy a country mansion, take money to refurbish it, furnish it lavishly, buy cars, holidays, fly by helicopter all over the country, while very rarely being seen in the company. Putting a pay-freeze on the company’s employees for the last two years and into the future, because ‘the company can’t afford it’….surely this can’t be right. The company has apartments abroad, which he uses free. They are available for the staff to use, but they can’t because the cost to them would be exorbitant…what do you think? all the best to the guy, is he an m.p by any chance?:Razz

[George Brims]

The legally would probably depend on whether it's a private or a publicly traded company. People have gone to jail in the US for treating companies as their personal piggy banks. Even if it's legal, shareholders might take a dim view, since anything he's spending is coming out of their dividends.

As for moral, I think it's pretty bad. And it doesn't improve company morale, that's for sure. However with unemployment raging, this guy is probably taking the view he can get away with treating employees like that since they will have less prospects of jumping ship.

[Phill]

Is it legally, or even morally right, that the owner of a company should be able to take money from the company to buy a country mansion, take money to refurbish it, furnish it lavishly, buy cars, holidays, fly by helicopter all over the country, while very rarely being seen in the company. Putting a pay-freeze on the company’s employees for the last two years and into the future, because ‘the company can’t afford it’….surely this can’t be right. The company has apartments abroad, which he uses free. They are available for the staff to use, but they can’t because the cost to them would be exorbitant…what do you think?

You need to clarify "take" here! Also you need to clarify what the status of the "company" is i.e. proprietor, partnership, Ltd co or Plc.

Morally it is questionable, and in my view only because of the pay freeze that has been imposed. Legally, well, I think you already know better than the rest of us. :eek:

Can we be sure that the refurbishment cost and furnishings have been paid by "the company" ?
How are the holidays paid for?
How are the cars paid for?
Is the helicopter a charter or owned, if owned who by & how operated?
A more detailed answer than "by the company" is required here, by which co' and by what method? Cash! Invoice, credit card.
Is there more than one company involved, i.e. a group of companies operating under the same banner.

What you are alluding to is that the owner is bone idle and bent as they come, fiddling thousands out of the "company" whilst the employees are slogging their guts out for peanuts.

Could it also be that after many years of building the business up the owner is now reaping the rewards and heading for retirement, selling off their shares in the business and using this money (after the tax has been accounted for) to purchase their retirement home and and a car or two for the family.
They may have been very busy behind the scenes or out of the office conducting their business affairs on a face to face level, hence the requirement to legitimately charter a helicopter to do this.
It is entirely possible that they have implemented an exit strategy that allows them to profit from the business they made whilst protecting the business and the workforce over the next few, very uncertain, years.

We really do need to look at the bigger picture sometimes.

My guess is though that they are ripping the arse out of the company before it all goes tits up RBS stylee and the directors get a whopping big payout and all their personal assets (paid for by the co') are protected and the workforce end up on the dole and it will come out that the whole thing has been bancrupt for years but running on fraudulently obtained loans that will never be recovered.


Que cera cera!!

[davie]

My guess is though that they are ripping the arse out of the company before it all goes tits up RBS stylee and the directors get a whopping big payout and all their personal assets (paid for by the co') are protected and the workforce end up on the dole and it will come out that the whole thing has been bancrupt for years but running on fraudulently obtained loans that will never be recovered.


Que cera cera!!

You are obviously referring to Great Britain PLC