Lost love can be the least of a husband and wife’s troubles if the taxman comes knocking at the door, according to Andrew Donaldson, forensic director at the Birmingham office of BTG Global Risk Partners, part of corporate recovery group Begbies Traynor.
Because, if the pair have been hiding the full extent of profits at the family firm, it is all too likely to come out in the divorce.
“It will likely return to bite you,” said Mr Donaldson. “Artificially suppressing profit figures in order to avoid paying more tax amounts to fraud.
“If the marriage/partnership comes to an end and one wants out, they often demand the ‘true’ 50 per cent value of the business and this can lay both open to penalties for not declaring business profits properly. You have saved money from the taxman over the years, but will it cost you horribly in the long run?”
Any insurance covering loss of earnings as well as buildings and contents – say in respect of a fire – could also be affected.
“Any claim for loss of earnings based on the real profits would be a complete giveaway. The alternative is to keep quiet and accept a lesser payout on the basis of the profits you have been submitting to the authorities. If suspicions are aroused, then you could face big trouble.
“If you fall foul of a police investigation for fraud or trying to make an exaggerated insurance claim, police and HMRC can compare your declared profit with what you have been banking.”
Mr Donaldson went on: “In addition to the consequences of being found to have falsified your tax records, there may be other previously unforeseen consequences.
“If your marriage turns sour and a vengeful partner is out to get you then your business secrets could be laid bare.”
