Company Deed of Trust..... ??

[prozak]

I've read on this forum about being able to shift some cash from your company to yourself to hold in trust.

Obviously this is a sensitive subject and you don't want to just have HMRC view this as a loan or worse Dividends.

So, If I wanted to hold cash in a personal savings account on behalf of my company for lets say, purposes of security and peace of mind so that should my company's bank go bust there is no loss of funds or problems with cash flow how would I do it?

Obviously there is a benefit to me as it would offset my mortgage.

[Old Greg]

I've read on this forum about being able to shift some cash from your company to yourself to hold in trust.

Obviously this is a sensitive subject and you don't want to just have HMRC view this as a loan or worse Dividends.

So, If I wanted to hold cash in a personal savings account on behalf of my company for lets say, purposes of security and peace of mind so that should my company's bank go bust there is no loss of funds or problems with cash flow how would I do it?

Obviously there is a benefit to me as it would offset my mortgage.

Have a look at THEPUMA's posts. Whether you then want to do it or not is another matter. I'd run a mile from it, personally. My amateur 'test' for this is to think about whether I'd like to drop a note to HMRC letting them know what I'm doing 'just to be above board'. It just sounds like a Director's loan to me.

Having said that, if someone realy does have a way of doing it, do share it and I'll be onto it like a shot as I have an off-set.

[prozak]

Yeah that is my concern.

There is no real detail from THEPUMA that I can see.

I sent him a message but no reply.

Hence the question.

[pmeswani]

Yeah that is my concern.

There is no real detail from THEPUMA that I can see.

I sent him a message but no reply.

Hence the question.

From what I understand from a friend of mine, you can take the money out as a Director's Loan (assuming the amount is above £5k), providing you return the money back before year end. If you don't return it back to the business account by year end, you will need to decalare it on your returns. If you return the money by year end, you don't need to declare the money as withdrawn on your returns.

I don't know what the Accountants would say on the forum regarding this.

[Clare@InTouch]

From what I understand from a friend of mine, you can take the money out as a Director's Loan (assuming the amount is above £5k), providing you return the money back before year end. If you don't return it back to the business account by year end, you will need to decalare it on your returns. If you return the money by year end, you don't need to declare the money as withdrawn on your returns.

I don't know what the Accountants would say on the forum regarding this.

If it's a loan then you would have to pay interest on it, or it would be a taxable benefit in kind. This would likely wipe out any interest you save on your mortgage, making it not worth the risk. I think the point PUMA makes with the deed of trust is that he believes it would not then be a BIK.

[pmeswani]

If it's a loan then you would have to pay interest on it, or it would be a taxable benefit in kind. This would likely wipe out any interest you save on your mortgage, making it not worth the risk. I think the point PUMA makes with the deed of trust is that he believes it would not then be a BIK.

Isn't the interest due if the Loan resides in your personal account post-year end? Or is it applicable from the moment you take the money out of the business?

[Clare@InTouch]

Isn't the interest due if the Loan resides in your personal account post-year end? Or is it applicable from the moment you take the money out of the business?

There's two issues:

Section 419 (now Section 455) - this is the extra CT that a company will pay on any loan that is outstanding 9 months after the year end, regardless of the value of the loan. This is charged at 25% of the value outstanding, and repaid to the company when the loan is repaid.

Benefit in Kind - this is charged against the employee on any loan going over £5,000, plus employer's NI would be due. It's apportioned based upon the amount of time the loan is outstanding, and is due regardless of when it's repaid.

[northernladuk]

Have a look at THEPUMA's posts. Whether you then want to do it or not is another matter. I'd run a mile from it, personally. My amateur 'test' for this is to think about whether I'd like to drop a note to HMRC letting them know what I'm doing 'just to be above board'. It just sounds like a Director's loan to me.

Having said that, if someone realy does have a way of doing it, do share it and I'll be onto it like a shot as I have an off-set.

I am with Old Greg on this one and his 'test' works for me as well. There is also the common sense factor. Can I move money out of a company (lets use A company rather than MY company to make it black and white) to gain me personal finacial advantages and then moving it back with no penalty? Doesn't sound right at all. Would you imagine the state of the world if every company owner (and I am talking big companies) moved the money out of the company to their own accounts? Sounds like a very slippery slope that no one wants to see.

Ok ok common sense and HMRC do not go hand in hand and their are clever ways around everything but it gives me something to think about and of course I would look in to it to be sure but thats my thought process.