Should wages paid to daughter be included in Directors Remuneration note?
One of my recent clients is a company with a sole director and shareholder who takes no salary himself but apparently does play an active role. Originally it was his son-in-law who was going to run the company but he didn't want to be either a director or a shareholder due to a long-running dispute with someone who ran another business with him. In fact, he is not even an employee and takes all his fees via an umbrella company.
I was going to disclose him as a shadow director but he and his father-in-law are dead against it. They argue that things have changed since the business was started and the son-in-law no longer plays an active part. Apparently the father-in-law makes all key decisions himself. I have asked them to put all this in writing!
I have no evidence to suggest otherwise (apart from the fact the son-in-law was at the initial meeting and it was he who first contacted me) so no reason to disbelieve them. Also, I don't think the son-in-law is disqualified or an undischarged bankrupt so no issues there.
His wife is employed by the company and the director (her father) wants to pay her a £22k bonus. This is fairly material as profit before tax was about £100k. My question is whether this should be disclosed in the Directors Remuneration note. The FRSSE (section 17) is silent on this although it does define Directors Family. I wonder whether this is just for related party transactions or includes the remuneration note too. As it is salary it does not have to be disclosed as a related party transaction, so no worries there.
His mother is also employed as a book-keeper (which she does very well) but if he is not a shadow director then I assume her salary will not require disclosure under Directors Remuneration.
Anyone got any thoughts on this?
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