Temporarily receive (first) payment into private bank account

[WaldemarPross]

Hi guys,

I just started to work as contractor and have set up a Ltd company.
I've applied for a business account at Lloyds and HSBC (will see whichever is available sooner) but it won't be ready before I will receive the first payment.

So I wonder if it is legal to receive my first payment to my personal account and then as soon as the business account is ready, transfer the who invoice amount.
Of course I will record all the necessary details and if required ask the agency who pays me to provide necessary information, documents etc.

I asked my accountant and she said this is not possible. The guy in the HSBC bank said it shouldn't be a problem if you record it properly.


What do you think?

What would be the other options?
The agency cannot hold the payment back just for few days. They can postpone it until next payroll... which is next month and would be a problem for me.

I already have the account details from Lloyds, but the account is not ready to receive money.

Thank you guys!

[DirtyDog]

The agency should refuse to make a payment into a bank account that is not in the name of the company. Have you asked them whether they would make a payment into your personal account?

Chase the bank and get the account ready, or leave it until next month.

[TheCyclingProgrammer]

Whilst its not ideal, I can't see how it would be a problem as long as you didn't do anything with the money and transferred it in as soon as your business account was opened. I can't say for certain if there are potential implications of doing this though but I think in practice, HMRC would view this pragmatically as long as there was clear evidence that the money was transferred directly to the company as soon as possible.

If you want a belt and braces approach to protect you against any tax implications, you could record the amount in your books as both a payment received against your invoice and a payment made to the directors loan account, although that only really works if the loan is under £5k.

I did this in the past when I was receiving income for app sales on the Apple App Store, the contracts had all been changed into the company name and the income was going through the company books, but I was having problems getting Apple to update the banking details so payments continued to be received into my personal account. I did have my business account open though so I immediately transferred the money to the business account, so not quite the same thing.

[Clare@InTouch]

If you want a belt and braces approach to protect you against any tax implications, you could record the amount in your books as both a payment received against your invoice and a payment made to the directors loan account, although that only really works if the loan is under £5k.

^ This, if it absolutely cannot be avoided.

I'd agree with DD though, in that the agency should refuse to make payment into an account that is not in the company name.

[TheCyclingProgrammer]

^ This, if it absolutely cannot be avoided.

I'd agree with DD though, in that the agency should refuse to make payment into an account that is not in the company name.

Realistically though, even without recording the directors loan (lets assume it was over £5k), would this really cause a problem, practically speaking, if it really was a one off and there was a paper trail?

[Clare@InTouch]

Realistically though, even without recording the directors loan (lets assume it was over £5k), would this really cause a problem, practically speaking, if it really was a one off and there was a paper trail?

It's highly unlikely to, and I doubt anyone would ever notice.

But I'd still recommend it's done through the business account just to show a commercial viewpoint, and show that business & personal were never mixed. It would give HMRC no excuse to look through your personal bank statements at a later date.

[northernladuk]

Realistically though, even without recording the directors loan (lets assume it was over £5k), would this really cause a problem, practically speaking, if it really was a one off and there was a paper trail?

Problem is if you push the boundaries on absolutely everything which every bit advice you give is to do you will end up with a raft of small(ish) issues that are going to amount to a world of trouble if you get caught. A bit here a bit there and HMRC will be all over like a rash with a pretty bad outcome. Surely something somewhere should be done by the book no? These are newbies you are giving this advice to, not experienced guys that know what they are doing.

[TheCyclingProgrammer]

Problem is if you push the boundaries on absolutely everything which every bit advice you give is to do you will end up with a raft of small(ish) issues that are going to amount to a world of trouble if you get caught. A bit here a bit there and HMRC will be all over like a rash with a pretty bad outcome. Surely something somewhere should be done by the book no? These are newbies you are giving this advice to, not experienced guys that know what they are doing.

I realise that, but it seems pretty clear that OP intends do this only once and has a genuine pragmatic reason for doing it.

I completely agree with everything said regarding keeping business and personal finances separate.

OP: the safest approach by far is to just get the agency to postpone payment and chase your bank about getting the account opened. If the invoice value is below £5k then you can still safely take the directors loan approach but still make sure you pay it back right away (and re-credit the loan account).

[tractor]

The agency should refuse to make a payment into a bank account that is not in the name of the company. Have you asked them whether they would make a payment into your personal account?

Chase the bank and get the account ready, or leave it until next month.

This.

I would be more worried about a bank that cannot open an account within a week. Especially if you already have an account with them (I assume your personal account is with them also)

[WaldemarPross]

Guys, thank you all for the responses.

I will try to chase the HSBC. But since they sent my proof of ID just on Fri, I don't think it will be finished on Tue...
I talked to an accountant at SJD and they said it is not possible to transfer to my private account.

Another option would be to get a cheque.