Reply to: Quesrterly VAT payment - Paid in time - but letter requesting payment

[JB3000]

Spoke with my uncle today and he confirmed that there was an issue but its resolved now. The original electronic submission had an issue so its been resummited.

From what I can gather here it sounds like your uncle forgot to submit your VAT return

[northernladuk]

So simply saying "do this, it'll be OK they'll never notice" is [charitable] highly questionable [/charitable]

Am liking these!! Might have to borrow them sometime.

[northernladuk]

There was an accountant on here years ago that suggested that approach. It was at the time banks were dodgy though so there was a sane rational for it...

If the bank went belly up one of the first tasks would be to consolidate any loans against any funds in any accounts. Hence the £100,000 belonging to the company wouldn't totally disappear when the bank went belly up. While £100,000 would be lost when the bank went bang it would be offset by the remaining mortgage being £100,000.. And you could then refund the money back to the bank by extending the mortgage back to its original amount.

Its still dodgy but there was a valid reason at the time to justify doing it..

Yeah, this used to be THE PUMA's little project.

[northernladuk]

Do we dig out the thread where the guy's wife was doing their books?

A classic indeed!

[eek]

For the brave of heart:-

1. Open a NEW account
2. Execute a carefully worded deed of trust noting that the monies are held in this account by the director on trust for the company.
3. The money MUST remain in this account.
4. Offset the account against the personal mortgage.

I do not believe this has been tested and failed (though I do imagine a number of people have yielded to pressure).

Case law AGAINST it: Mirror Image Contracting Ltd v HMRC

But the key difference with the above is that the funds never become intermingled with other personal funds.

Does a company have to bank in its own name? No.
Is there BIK involved? Arguably
Will it breach the bank account conditions? Quite possibly
Could this give rise to interesting legal consequences? Definitely

So simply saying "do this, it'll be OK they'll never notice" is [charitable] highly questionable [/charitable]

But the underlying transaction set could conceivably achieve the desired effect if properly implemented.

There was an accountant on here years ago that suggested that approach. It was at the time banks were dodgy though so there was a sane rational for it...

If the bank went belly up one of the first tasks would be to consolidate any loans against any funds in any accounts. Hence the £100,000 belonging to the company wouldn't totally disappear when the bank went belly up. While £100,000 would be lost when the bank went bang it would be offset by the remaining mortgage being £100,000.. And you could then refund the money back to the bank by extending the mortgage back to its original amount.

Its still dodgy but there was a valid reason at the time to justify doing it..

[ASB]

Erm, it wasnt a suggestion, it was evidence that family accountants can be incompetent as well.

For the brave of heart:-

1. Open a NEW account
2. Execute a carefully worded deed of trust noting that the monies are held in this account by the director on trust for the company.
3. The money MUST remain in this account.
4. Offset the account against the personal mortgage.

I do not believe this has been tested and failed (though I do imagine a number of people have yielded to pressure).

Case law AGAINST it: Mirror Image Contracting Ltd v HMRC

But the key difference with the above is that the funds never become intermingled with other personal funds.

Does a company have to bank in its own name? No.
Is there BIK involved? Arguably
Will it breach the bank account conditions? Quite possibly
Could this give rise to interesting legal consequences? Definitely

So simply saying "do this, it'll be OK they'll never notice" is [charitable] highly questionable [/charitable]

But the underlying transaction set could conceivably achieve the desired effect if properly implemented.

[teapot418]

Set up a Direct Debit for your VAT, and get your accountant to email you the submission confirmations. Then you know you're straight for the future.

[northernladuk]

Erm, it wasnt a suggestion, it was evidence that family accountants can be incompetent as well.

[philo]

Spoke with my uncle today and he confirmed that there was an issue but its resolved now. The original electronic submission had an issue so its been resummited.

i've got no problems with family doing this for me - have been doing it for years for my cousins without any problems.

Thanks for the advice guys, and to the poster who mentioned someone being advised to put all their business account money into an offset account its not advice they have given me! but thanks for your suggestions and understand where you are coming from.

[SimonMac]

Which is why I'm pushing the proof of payment thing.

Sorry OP, but we're contractors and we don't trust anyone, particularly family....

Do we dig out the thread where the guy's wife was doing their books?

[SimonMac]

They can't they pay it to their accountant who pays it for them, same as CT

Ahhhhhh, didn't know you give over access to this if you use an accountant, the control freak in me would never allow that!

[northernladuk]

Why not just logon the HMRC site and check that the payment went into the correct account?

https://online.hmrc.gov.uk/

They can't they pay it to their accountant who pays it for them, same as CT

[SimonMac]

Why not just logon the HMRC site and check that the payment went into the correct account?

https://online.hmrc.gov.uk/

[cojak]

Which is why I'm pushing the proof of payment thing.

Sorry OP, but we're contractors and we don't trust anyone, particularly family....

[northernladuk]

Thanks. Reassures me a little but with it all being new just a bit of a panic.

I'm hoping its just a generic letter sent out in error but don't want to leave it just in case there is an issue.

I'll try and find a number for local tax office and give them a call once I've spoken to accountant - who is also family (but away on holiday till tomorrow).

Cheers

Completely off topic but couldn't help to comment. Be very careful with this, mixing your family up with your business isn't always a good idea. I'm sure in many cases it might work and everyone is happy but am sure there are plenty of cases where people are getting a much worse service just because it's family. You would think you can trust family to look after you better but in many cases they'll give you a second best service because of the relationship as you won't mind waiting where clients won't. You also have to be prepared to sack your accountant if things aren't going well which is going to be difficult for a family outfit.

Being family doesn't always mean they are the best out there for you either. Darren Upton has family and he is an accountant.....

If you are clued up, understand contracting and are happy with the risks then fill your boots, if you are not and they are the first person you thought off you might just want to keep your eye on that situation.

For the record I have an accountant in my family who I declined to use because of the family connection. She was at a party at Christmas advising someone else who contracts to withdraw all their money from the business account and stick it in an offset until the time came it's needed back in the business account and just transfer it back. they'll never find out....