Setting up Direct Debit from Company Accounts to pay off Credit Card in my name

[PhilMUK]

Evening all,

I am relatively new to contracting but have done a fair bit of reading and did qualify as a CA some time ago. I have received some advice from my accountant and just wanted to run it by this board to get an overall consensus. I am a contractor operating through LTD CO.

I have a personal Amex card of which I intend to pay off in full every month. All company expenses go through this card, travel, food, bills, hardware. I also use the card for personal online purchases for the added protection and bonus points on the card, and have a spreadsheet documenting these purchases.

I have been advised that I can set up a Direct Debit from my Company account to clear the personal Amex in full every month. When it comes to preparing the accounts, my accountant will go through the purchases and invoices and strip out all of the personal expenses, and treat these as if they were a dividend payment to myself and as such removing at tax benefit of the personal purchases made during the year being paid by the LTD CO.

Is the above arrangement okay in most peoples eyes? I was thinking of just paying off any personal purchases with my debit card 3 days before the balance is paid for in full by the company so that everything the company pays for is business related. This is slightly more involved then my accountants approach and hence I thought I would see what the board thought.

Appreciate the help!


Phil

[cojak]

Get a company credit card and use that. No problems with P11D then.

[PhilMUK]

Only issue with that is I will miss out on £400/500 quid cash back a year for doing absolutely nothing. If the above is all above board I would prefer to be able to benefit from it. However if it's not above board / in breach of some sort or legislation I won't go ahead. I have £1500 on the Amex of 80/20 Company/Personal that I need to decide how to settle.

[mudskipper]

...my accountant will go through the purchases and invoices and strip out all of the personal expenses, and treat these as if they were a dividend payment to myself ...

You need to get a new accountant.

Dividends must be paid from retained profit, and a dividend voucher created.

See Limited Company Dividends Guide :: Contractor UK

It might be possible to do something with the director's loan account, but as cojak suggests, it's all going to be a lot simpler if you get a company credit card.

You will still need to retain receipts for all business expenses.

Why would you want to do this?

[meridian]

You need to get a new accountant.

Dividends must be paid from retained profit, and a dividend voucher created.

See Limited Company Dividends Guide :: Contractor UK

It might be possible to do something with the director's loan account, but as cojak suggests, it's all going to be a lot simpler if you get a company credit card.

You will still need to retain receipts for all business expenses.

Why would you want to do this?

To be fair, a lot of accountants initially treat payments to directors as dividends, regardless of dividend vouchers. InTouch, for example, do the same; it's easy enough to correct at the end of the year by informing them of the actual voucher amounts and declaration dates.

[PhilMUK]

You need to get a new accountant.

Dividends must be paid from retained profit, and a dividend voucher created.

See Limited Company Dividends Guide :: Contractor UK

It might be possible to do something with the director's loan account, but as cojak suggests, it's all going to be a lot simpler if you get a company credit card.

You will still need to retain receipts for all business expenses.

Why would you want to do this?

Thanks for your reply. In fairness to him, he may have said directors loan and not dividends but I will take this into account. I guess the arrangement works because I can benefit from the cashback using my Amex for all business expenses .


I wanted clarity over whether setting up a direct debit from my company bank account to pay off the personal AMEX in my name was okay? Nothing in the legislation stopping that arrangement happening ( can assume all payments on the personal card are business expenses to simplify)?


As an aside : am i required to keep the receipts of all lunch and travel expenses? Is the Credit Card statement not sufficient? I use my Amex contactless for daily travel and no receipt is produced per transaction , only a "TFL" line on my statement after I have touched in for example. Similarly "Nandos or Pret" for lunch.

Appreciate the help.

[mudskipper]

To be fair, a lot of accountants initially treat payments to directors as dividends, regardless of dividend vouchers. InTouch, for example, do the same; it's easy enough to correct at the end of the year by informing them of the actual voucher amounts and declaration dates.

Really? InTouch have never suggested this to me - I'd be querying it if they did. I know they use the loan account for payments that are below or above what you're supposed to be taking, but that's different to declaring a dividend without the paperwork.

[mudskipper]

Thanks for your reply. In fairness to him, he may have said directors loan and not dividends but I will take this into account. I guess the arrangement works because I can benefit from the cashback using my Amex for all business expenses .

Just to be clear, do I still need to keep the receipts of all lunch and travel expenses? Is the bank account statement not sufficient? I use my Amex contactless for daily travel and no receipt is produced per transaction , only a "TFL" line on my statement for example. Similarly "Nandos or Pret" for lunch.

Also a fundamental point i wanted clarity over was whether setting up a direct debit from my company bank account to pay off the personal AMEX in my name was okay? Nothing in the legislation stopping that arrangement happening ( can assume all payments on the personal card are business expenses to simplify)?

Appreciate the help.

If the motivation is loyalty points, then pay the expenses out your personal account and reclaim them from yourCo - in a similar way to what you would have done as a permie employee.

Mixing yourCo money and your money is unnecessarily muddying the waters.

You need receipts. Nandos and Pret will issue them. TFL has been discussed - if you do a search you should find the consensus.

[SueEllen]

With TFL you can sign up online and you can put a debit or credit card on an oyster account. You then will get a monthly statement detailing your journeys with the cost.

[WordIsBond]

You can use your Amex for business expenses, no problem.

But it is so much cleaner to keep a record of which Amex charges are business expenses, and once a month have YourCo reimburse you for those expenses. You personally pay Amex.

Otherwise, it gives the impression you are mixing personal and company funds, and HMRC aren't going to like that if they ever investigate. Reimbursement for business expenses? Sure, everyone does that. Paying personal credit cards with company funds? Please sit down, PhilMUK, and explain very carefully how we know you have really reimbursed absolutely everything you should have to your company.