Referral Fee received. Now what?

[Jessica@WhiteFieldTax]

Even if it was paid to private account, I would struggle to see how it wouldn't be taxable income, so it needs declaration on Self Assessment.

Thought about VAT accounting for it at all?

[Fandango]

surely for such a small amount it could easily be explained away as the sale of some such personal item ie an old car, bike, piece of equipment etc

I've never had a SA enquiry but I would assume HMRC would just ask what that particular line on one of your bank statements was? I guess the only tricky bit would be if the reference said A.RecruitmentAgency Reference ReferralFee ?!?

[BrilloPad]

Should have got it paid into your personal bank account then Hector would have been none the wiser

Of course it would have been declared on the tax return.

[Clare@InTouch]

surely for such a small amount it could easily be explained away as the sale of some such personal item ie an old car, bike, piece of equipment etc

I've never had a SA enquiry but I would assume HMRC would just ask what that particular line on one of your bank statements was? I guess the only tricky bit would be if the reference said A.RecruitmentAgency Reference ReferralFee ?!?

Or if they found out you were lying, in which case you're looking at a nice big penalty, plus interest, plus HMRC having an excuse to open further enquiries into further years, and generally making your life hell for a while.

[TheFaQQer]

surely for such a small amount it could easily be explained away as the sale of some such personal item ie an old car, bike, piece of equipment etc

It could.

But some people stop shy of tax fraud.

[Fandango]

But some people stop shy of tax fraud.

There is that

[TheCyclingProgrammer]

It was simply for referring someone for a role at same ClientCo who was successful in his application.

Why into my company account? Gah, my fault. It was simply the course of least resistance. The payer has been struggling to set up even one payment instruction to LtdCo for services. The prospect of trying to support them through setting up a second to PersAcct just seemed a step too far for both of us.

Accountant response is pending. I asked on here as I presumed maybe others had been recipients of referral payments.

If you can prove that the referral fee should have been paid to you personally and its ended up in YourCo's account by mistake, then credit it to the director's loan account in your books and withdraw it whenever you like. Check with your accountant first though.

As mentioned above even if its yours personally you'll still probably have to declare it on your SA and pay income tax on it (you can declare it in the "Any additional income" box).

[TheCyclingProgrammer]

Having said that, the broader question of whether a) the referral fee should actually be payable to OP or their company and b) if payable to OP personally whether or not is taxable income is an interesting one.

I got a £100 bonus when I opened my personal First Direct current account. Should I have declared that as income? Isn't this largely the same thing?

[jamesbrown]

Having said that, the broader question of whether a) the referral fee should actually be payable to OP or their company and b) if payable to OP personally whether or not is taxable income is an interesting one.

I got a £100 bonus when I opened my personal First Direct current account. Should I have declared that as income? Isn't this largely the same thing?

Your example does not involve income or a capital gain, in my opinion. Rather, it's a gift. For a referral fee OTOH, that would be taxable as income.

[Wanderer]

Even if it was paid to private account, I would struggle to see how it wouldn't be taxable income, so it needs declaration on Self Assessment.

So since the payment is income it would be more tax efficient for the money to be paid to the company (which pays CT then a dividend) rather than the director receiving it directly (pays income tax/NI via self assessment).

Thought about VAT accounting for it at all?

Hmmm, that's a tricky one.