Invoicing your own business (B2B)

[Koive]

Is it possible to invoice my own business from another business that I own even though the work was completed by me?

Here is an example

Business 1 - Is User Experience (UX) consultancy
Business 2 - Is an online service in the e-commerce space

I'm a director of both business but I have provided business 2 a service from business 1

Would I legally be allowed to invoice business 2 from business 1 even though I'm a director of both businesses?

Hope that makes sense..

[NotAllThere]

Yes, of course it's legal. Why wouldn't it be? I am not a lawyer.

[ladymuck]

I don't see an issue with it. As long as there was genuine work done, and it's not a scam to move money about to avoid liabilities...

[malvolio]

Contractor Learning 101...


You, YourCo, any other YourCo and any other Company anyway are entirely separate persons, legally. Why do you not know that?

[Lambert Simnel]

I dunno, I'm not a lawyer, but this sounds as though it could be abused as a mechanism for profit-shifting for tax avoidance purposes. I have some experience in transfer pricing, and if these companies were in different tax jurisdictions then it would certainly look a bit iffy. HMRC are, I guess, unlikely to notice for the sums involved, but if this reduces the overall corporation tax take across the two companies (say by migrating profit to a company which is otherwise making a loss) then they would have a case for looking at this as just a tax avoidance exercise.

[oilboil]

I dunno, I'm not a lawyer, but this sounds as though it could be abused as a mechanism for profit-shifting for tax avoidance purposes. I have some experience in transfer pricing, and if these companies were in different tax jurisdictions then it would certainly look a bit iffy. HMRC are, I guess, unlikely to notice for the sums involved, but if this reduces the overall corporation tax take across the two companies (say by migrating profit to a company which is otherwise making a loss) then they would have a case for looking at this as just a tax avoidance exercise.

As always the devil is in the detail here...

If as the poster says they actually did the work it can never be a sham for moving money about jurisdictions. If they just said they did the work and invoiced the company with money for £100K from the company without cash to reduce tax then I suppose the tax avoidance rules come into play.

Ultimately though "big business" does this all the time - its pretty standard - and if this is the only "borderline" activity you are doing then you are probably okay to justify it - but if you are skirting close to IR35 or other claiming for stuff you shouldn't then you've just opened yourself up to being higher on the "review radar" than you needed to be - for probably very little actual reward