Reply to: Is it illegal to have agency pay into personal account for LTD company

[mark271]

Carter Allan have accepted my application so should now be able to use them. Thank you all for your asnwers.

[Gonzo]

You can fill out a form to stop a personal account taking the tax at source, though.

That would be form R85 - but you can't use it unless your personal income should not be taxed at source, which wouldn't apply to the OP.

[VectraMan]

I think that (legally) you are completely wrong.

It's irrelevent that the director signed the contract, the debt is due to the company and a payment made in the name of the director will not discharge that debt.

The question is, what counts as paying the company? If I buy a sandwich at lunchtime and give the money to Sandwich Co. Ltd.'s representitive, does that not satisfy my debt to Sandwich Co. Ltd. because I haven't paid the money direct to Sandiwch Co. Ltd.'s account?

Similarly, I don't see how you could argue that paying money to a director of a company, following the instructions of the director of a company, and in exchange for services provided by the company, doesn't count as paying the company.

But IANAL, so this may be carp.

[TheFaQQer]

Personal accounts have tax on the interest, business accounts don't.

You can fill out a form to stop a personal account taking the tax at source, though.

ANYWAY - if the agency won't make payment into the account, the whole argument is a bit moot, really. You could get a cheque made out to the company (as already suggested), but it sounds like what ever you want to do - you need to get a company bank account sorted.

Some accountants can help with this.

[tim123]

It's not the same as paying an employee. A company director (i.e. you) has setup the agreement, signed the contract and specified where the money should go. If you were to receive the money and then try to claim the agent hadn't paid the company, I don't think you'd get very far in court.

I think that (legally) you are completely wrong.

It's irrelevent that the director signed the contract, the debt is due to the company and a payment made in the name of the director will not discharge that debt.

tim

[SueEllen]

Will look at setting up the halifax account until I am able to get a propper business account then maybe I could use that. I would not have a problem with HMRC looking at the personal account as there will only ever be business transactions from that account. I have not used the account for over 13 years and currently only 3p in there.

The point is HMRC may use this as an excuse to look at ALL your personal accounts not just this one.

As no one knows for sure the safest route is to try and keep things separate.

[mark271]

Will look at setting up the halifax account until I am able to get a propper business account then maybe I could use that. I would not have a problem with HMRC looking at the personal account as there will only ever be business transactions from that account. I have not used the account for over 13 years and currently only 3p in there.

[SueEllen]

Getting conflicting replys here and still not sure what is correct. The personal account is seperate and will only have business money in it. I know its not my money (until I pay a wage out of it). Its just taking a while finding an account and need to pay some bills so would like some money. I have around 4.5k I can invoice for but no way of getting the money. I looked at the halifax tresurer account but the accountant said I need a proper business account for them to be my accountant but could use a personal account in the short term if required.

Thanks for you help.

The only reason I can think an accountant would say this is because you may not be able to set up standing orders from the Treasurers account so they think they won't get paid, however there are still things called cheques.

BTW David@purpleaccounts is an accountant.

I've been warned not to use personal bank accounts for your limited is because you and the limited company are separate legal entities and if HMRC investigate your company's finances you are now allowing them to look at your personal bank accounts.

Additional it's been posted that some agencies are now checking that contractors have a limited company bank account.

The simplest solution would be to
1. Set up the Halifax treasurers account
2. Get the agency to pay you into this account
3. Every time you incur a business expense you can't pay from your business account, pay it from your personal bank account and then reimburse yourself like with normal expenses
4. Record it like normal expenses in your records.

[mark271]

Getting conflicting replys here and still not sure what is correct. The personal account is seperate and will only have business money in it. I know its not my money (until I pay a wage out of it). Its just taking a while finding an account and need to pay some bills so would like some money. I have around 4.5k I can invoice for but no way of getting the money. I looked at the halifax tresurer account but the accountant said I need a proper business account for them to be my accountant but could use a personal account in the short term if required.

Thanks for you help.

[NotAllThere]

Personal accounts have tax on the interest, business accounts don't.

Yes they do. Personal accounts have tax deducted in the interest. Business accounts don't. But tax is still due.

[VectraMan]

Paying it into your personal account will not discharge the debt and any agency that does this is asking for trouble.

It's not the same as paying an employee. A company director (i.e. you) has setup the agreement, signed the contract and specified where the money should go. If you were to receive the money and then try to claim the agent hadn't paid the company, I don't think you'd get very far in court.

[[email protected]]

Yep, This is more of less what I was going to say.

Paying it into your personal account will not discharge the debt and any agency that does this is asking for trouble.

tim

Absolutely, the contract is between the agency/end client, and your company. If you don't follow the contractual relationships in force, you are asking for trouble.

[tim123]

Your forgetting that you could claim payment was not made to the company and to you instead so ask for payment again.

Would Dixons let you buy a TV by paying into the account of a sales manager.

Yep, This is more of less what I was going to say.

Paying it into your personal account will not discharge the debt and any agency that does this is asking for trouble.

tim

[Sockpuppet]

Your forgetting that you could claim payment was not made to the company and to you instead so ask for payment again.

Would Dixons let you buy a TV by paying into the account of a sales manager.

[VectraMan]

As long as the company money is kept separate from your normal personal money everything is fine. The only difference between a business account and a personal one is the services you get with it - things like a BACS facility.

The agency are wrong and SJD are right.

Personal accounts have tax on the interest, business accounts don't.

I agree though - nothing wrong with this as long as you account properly for what's the company's money and what's your money. And if you do get interest, then the proportion of the interest earned from the company's money belongs to the company too, so it gets a bit tricky.