Issue with self-billing and accountant

[dansm77]

Hello, I'm new to the whole limited company thing, so please be gentle I've recently entered into the contract world, and am using Nixon Williams as my accountant. It has basically been smooth sailing up until my first pay. My accountant is insistent on having a copy of my invoice at the end of each month before advising me of a take home figure. This would be no issue if I raised my own invoices, as I could just email over copies. However, I'm going though this self-billing thing with Hudson. I do apparently get remittances sent from the Hudson payments team up in Scotland at the end of each month, but they will only send this via royal mail, despite the rest of their process being online. So it seems that if I am to go by the book with my accountant, receiving my personal pay is entirely dependant on the receipt of a piece of paper posted from Scotland at the end of each month. I probably just could have just raised my own invoices and given these to the accountant, and they would have been none the wiser...but I guess I'm kind of trying to do the right thing here. The accountant "requires" remittances from the self-billing, and refuses to process any figures until this is received. I've spoken with some of the other contractors I work with, and their process seems like much less hassle. Maybe I'm missing something here, and this is the way things are done, but it does seem kind of crazy to have to rely on snail mail before your accountant will do the job you're paying them for. As it stands today, my company was payed last Friday, and I still have no figures from the accountant as I'm still awaiting remittances to arrive in the mail. Has anyone else had a similar issue? Any thoughts/suggestions are welcome. Thanks.

[Wanderer]

The accountant "requires" remittances from the self-billing, and refuses to process any figures until this is received.

Welcome dansm77!

Presuming that you are the owner/director/sole shareholder of a Limited company (rather than an Umbrella or some such arrangement) then the fact is that you can do pretty much whatever you like. It's your company and your money. If some money comes into your company bank account then as director, you can take it out and put it where ever you want. You don't need anyone's permission to do this, but the money has to be accounted for in your year end accounts. You should also set aside money in the company for VAT, PAYE/NI, expenses etc, so don't take it all out and spend it or you will be in deep trouble with HMRC!

So really your question is of how much you can take out and how much to keep aside. The accountant will then do the figures for PAYE/Dividends/Expenses, but you don't have to wait for that to be done every month - just take some money out if you need some. If you took too much money out then balance it up by taking less out of next month's income. If you take too little, then you can just take some more out when your accountant does your figures for you.

Just be aware that if you take more than 5,000 out and it's not accounted for as a dividend or salary then HMRC may treat this as a "director's loan" which you will have to pay tax on in certain circumstances. However, if you take a chunk of money out which then accounted for as salary/dividends/expenses before the end of the tax year then there is no problem. The only time to be careful is around the end of the tax year when director's loans of over 5,000 have to be paid back or they will incur a tax charge on the interest (something like 6% of the loan value). If your accountant asks you why you took some cash out then just tell them "it was a director's loan, I'll pay this back out of the PAYE/Dividends the company owes me for this month".

A word of warning though. If you live hand to mouth and spend all your money each month then contracting probably isn't right for you. Get used to saving up some cash for a rainy day - remember that you won't get holiday/sick pay etc.

[Nixon Williams]

We do ask for copies of the "self-billed" invoice so that we can accurately calculate what is due to you.

Most self billing agreements, which I assume that you have signed, stipulate that you cannot issue your own invoice as well.

Our experience has shown that where a client issues their own invoice and does not supply us with a copy of the self-billed invoice, more often than not, there are errors which we eventuallly will only pick up when we complete the annual accounts.

If you need some funds now, you can take an advance and top up the balance once we have calculated the actual amount.

dansm77 - I believe that Anita has emailed you regarding this.

Please get in touch if you need any further help.

Alan

[malvolio]

Am also through Hudson. I simply ignore their "invoices" and treat them as Remittance Advices. I keep my own invoices in parallel (no harm in that as long as you don't submit them to anyone) rather than blow my own 14-year-long working practices, and it keeps the accountat's spreadsheet consistent and auditable agsnt my own records if needed. No harm having a cross-check on Hudson's sums either, although they have been spot on so far.

[Sausage Surprise]

Am also through Hudson. I simply ignore their "invoices" and treat them as Remittance Advices. I keep my own invoices in parallel (no harm in that as long as you don't submit them to anyone) rather than blow my own 14-year-long working practices, and it keeps the accountat's spreadsheet consistent and auditable agsnt my own records if needed. No harm having a cross-check on Hudson's sums either, although they have been spot on so far.

and that's precisely what I do too.

[Fred Bloggs]

and that's precisely what I do too.

Yes, here too.

[dansm77]

Thanks for all your replies.

I keep my own invoices in parallel (no harm in that as long as you don't submit them to anyone)

That's what I was hoping I could do, but this seems to be something that the accountant won't accept in terms of accounting the monthly figures, even if they aren't submitted to anybody.

We do ask for copies of the "self-billed" invoice so that we can accurately calculate what is due to you.

This is where it seems a bit inconvenient to be honest, and it all seems a little out of my control, i.e. I have to wait for something to arrive in the post from Hudson, then submit this to the accountant before monthly figures are calculated...even though I already know exactly what will be invoiced long before this. Not quite sure how I will proceed. I may even try to opt out of self-billing if possible...see how we go. Cheers.

[Wanderer]

I have to wait for something to arrive in the post from Hudson, then submit this to the accountant before monthly figures are calculated...even though I already know exactly what will be invoiced long before this.

I don't see what the problem is. Take the money out as a director's loan as soon as the company gets paid and square it up with the company once you get the divi/salary calculations through. Simples.

[BolshieBastard]

My accountant is insistent on having a copy of my invoice at the end of each month before advising me of a take home figure.

Get a new accountant. They are their to do your bidding, not you theirs.

[SackmanandCo]

You can have a directors loan account of up to £5,000 for 30 days without there being adverse tax implications