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Generally the fraud is that the salary is equivalent to their unused personal allowance (or possibly up to the lower rate threshold) so no tax is paid.
aggi-
I get what your saying - and I assume this situation is "utilised" by almost every limited company. I would add that my partner has a job which generates more than the personal allowance anyway, and that the salary from my limited company is taxed via their annual return, and as such no tax avoidance.
mcvw
But is it dodging? As they would pay tax via their annual tax return. And given that an additional employee would result in the requirements for a workplace pension, there would be additional NIC's to pay also.
One other thing to consider, with the partner as an employee, they would be eligible for the company bike scheme too! Bike n+2! Happy days!