Investing corporation tax in stocks/gold?

[northernladuk]

In my mind I can't get over the point that investing money to make money is a business activity and is therefore done with the company money. That then means it would be natural (in my mind) to not use tax mans money to do it. It isn't yours to use to invest. Does that make sense to anyone?

Just makes me uncomfortable thinking of schemes to use this money for anything more than sitting in a business account accruing some interest before I pay it to the tax man. Maybe I am being short sighted here and 'missing a trick' but after seeing enough threads about people needing to pay their personal money in to their company to be able to pay their co's tax/vat liabilities I have become a bit anal about it. When it is due I pay it fairly promptly rather than hanging on to it until the last minute just to make a few 10's of pounds profit (that is taxed).

[jonson]

I see the Bank of Cyprus do a 1.76% offering
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HA! RBS will be going that way soon

[pjclarke]

You can not earn more than about 2-3% without significant risk

Erm, 5% over 2 years is 2-3%.

[BlasterBates]

the investment structure I have in place, a 5-10% return over 2 years is guaranteed...some of it will be in physical gold, what are the rules on this

If this were true we would all be in it. There is a risk here. You can not earn more than about 2-3% without significant risk. You need to look again, in particular at the financial institute who is offering it.

Cypriot banks were offering above average "guaranteed" interest and look where that got the investors.

If it looks too good to be true then it definitely is.

[BlasterBates]

I would definitely advise against. Who knows when the next crash is. Investing in stocks should only be done with a long time frame in mind i.e. if there is a crash you can wait for the next recovery. Any money you need in the short/medium term should be cash on hand.

The best you can do here is a 2 year fixed term interest deal.

[LisaContractorUmbrella]

the investment structure I have in place, a 5-10% return over 2 years is guaranteed...some of it will be in physical gold, what are the rules on this

How is it 'guaranteed' exactly? And who by?

Big question here is - would you have the reserves to pay the tax man what you owe regardless of the performance of the investment? Gold prices rose pretty steadily 2009-12 but have levelled out over the last couple of years so I wouldn't expect a spectacular return.

From an accountancy point of view I can see no reason why your company can't invest money this way provided that HMR&C don't lose out because of it

[borderreiver]

Cater Allen is doing a savings account (Asset 30) at 1.35% which is better than a kick in the gonads I suppose. There's a 30 day wait for your money, but that's not a big problem if you're just parking tax money there I reckon.

[northernladuk]

What about putting the money into physical gold? which means you would pay for the gold with the business bank account, and then store it in a safe...would the accountant/HMRC or anyone have a problem with the money not staying in the business bank account?

There would be a tax on the profits you make from it don't forget....

The golden rule here, if it is possible and viable we would all be doing it. The fact none one has is your answer really. There are cleverer people than us trying to think these schemes up. Would your accountant back your plan to buy gold with tax money?

Why not look in to the business saver accounts? I see the Bank of Cyprus do a 1.76% offering but I would check the small print about them confiscating some of it when they feel like though

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[jonson]

Dunno about the rules on putting tax owed into risky investments, I'd guess that it is the company's money up until the date it falls due so you can do whatever is legit, and make up any shortfall if your stocks or gold go the wrong way.....

OTOH HMRC pay interest on early payments, which is a risk-free way of getting a small amount of income. This is what I do once warchest is in place. So unless you may need the cash to tide you over bench time or similar (and if you do you need to look at your cash flow, this should be ring-fenced) seems a better option than speculation. It's only 0.5% but that's more than Cater Allen will give you ...

HM Revenue & Customs: Other CTSA Interest Rates applying up to the normal due date

the investment structure I have in place, a 5-10% return over 2 years is guaranteed...some of it will be in physical gold, what are the rules on this

[pjclarke]

Dunno about the rules on putting tax owed into risky investments, I'd guess that it is the company's money up until the date it falls due so you can do whatever is legit, and make up any shortfall if your stocks or gold go the wrong way.....

OTOH HMRC pay interest on early payments, which is a risk-free way of getting a small amount of income. This is what I do once warchest is in place. So unless you may need the cash to tide you over bench time or similar (and if you do you need to look at your cash flow, this should be ring-fenced) seems a better option than speculation. It's only 0.5% but that's more than Cater Allen will give you ...

HM Revenue & Customs: Other CTSA Interest Rates applying up to the normal due date

[jonson]

What about putting the money into physical gold? which means you would pay for the gold with the business bank account, and then store it in a safe...would the accountant/HMRC or anyone have a problem with the money not staying in the business bank account?

[Jessica@WhiteFieldTax]

Yes, its possible.

Beware of the risks of investments falling and your loosing the money set aside for tax. Tax man won't take "investment losses" as a non payment excuse!

If the company becomes investment top heavy you can loose access to entrepreneurs relief on closure.

[jonson]

I have a question regarding corporation tax. Say the accounting year end is Jan 31 every year. I am leaving 20% of the total business income in a separate business account. This is going to stay there until I have to pay HMRC, in September/Oct 2014. So that's a bit under 2 years the money is doing nothing. Would it be possible to put this money into gold, or low risk stocks? What are the rules on this?

Thanks