Living off your Business Bank Account

[Martin at NixonWilliams]

Does he not have an accountant then?

I hope not!

One unlikely possibility is that he may not be withdrawing his salary, dividends or expenses and is simply offsetting his personal outgoings with the amounts owed to him.

This is clearly bad practice, it is the only plausible way this arrangement could work without a loan arising.

[Wanderer]

I understand that, but this is assuming you account and report them, and pay taxes on them, things that he doesn't do, and I am just wondering what the consequence of this would be if he gets investigated (unlikely though I suppose).

He would have to pay the tax owed, plus interest and a penalty of up to 100% of the tax owed for deliberately under declaring his income or claiming expenses which were clearly not allowed.

Does he not have an accountant then? How can you be sure that his accountant doesn't just square all this BIK/directors loan up at the end of the tax year?

[Sockpuppet]

DLC?

There are only certain types of things you can expense on your business, last time I looked into it. Are you saying it's perfectly OK to put your entire life expenses through your IT Contractor Business Account, so long as you account for the expenses properly?

Directors load account. Not really sure why I always abbreviate it to DLC many because its directors load control account in sage.

It is OK to put what ever you like through your business account. As long as everything that isn't a business expense is paid for or claimed on your P11d you can do as you like. As pointed out above through a really crap idea.

[convict]

The easiest way to find out is to fill out the form here and watch what happens...

And don't forget to post back with the results

[TheFaQQer]

I understand that, but this is assuming you account and report them, and pay taxes on them, things that he doesn't do, and I am just wondering what the consequence of this would be if he gets investigated (unlikely though I suppose).

The easiest way to find out is to fill out the form here and watch what happens...

[northernladuk]

I understand that, but this is assuming you account and report them, and pay taxes on them, things that he doesn't do, and I am just wondering what the consequence of this would be if he gets investigated (unlikely though I suppose).

Unlikely isn't really justification for doing something like this. It is unlikely to get investigated if you do everything properly. If you start dicking with your accounts like this it is puts you at a much greater risk of being flagged by HMRC and get investigated. I would expect he will get fined a percentage of all the stuff he should have paid tax on as well as interest as well as paying the tax on the stuff they find. If he has been so lax in his accounting and they suspect fraud they can go back many years and may even charge him with tax evasion/fraud and possibly have him struck off as a director.

I can't see for one minute what he is doing is worth the potential fall out. Let him **** his own life up and you just get on with yours.

[malvolio]

He doesn't pay BIK or taxes due, he simply claims and claims. Is this considered a type of benefits or tax fraud I wonder?

I'd suggest tax evasion, if he's not paying taxes on personal income. Rent is not a business expense, for example.

[Peter Loew]

There's nothing wrong with doing that, or running a business through your personal account for that matter, although the bank may have an issue.

I understand that, but this is assuming you account and report them, and pay taxes on them, things that he doesn't do, and I am just wondering what the consequence of this would be if he gets investigated (unlikely though I suppose).

[VectraMan]

There's nothing wrong with doing that, or running a business through your personal account for that matter, although the bank may have an issue.

[Peter Loew]

if you pay the BIK and taxes due you can claim anything. Not very tax efficient though, the guy must either be fiddling it like mad or taking the hit.

He doesn't pay BIK or taxes due, he simply claims and claims. Is this considered a type of benefits or tax fraud I wonder?

[stek]

DLC?

There are only certain types of things you can expense on your business, last time I looked into it. Are you saying it's perfectly OK to put your entire life expenses through your IT Contractor Business Account, so long as you account for the expenses properly?

if you pay the BIK and taxes due you can claim anything. Not very tax efficient though, the guy must either be fiddling it like mad or taking the hit.

[Peter Loew]

Nothing assuming he's accounting for it properly.

While it's bad form and a bit confusing if he has the mother of all P11ds or a massive DLC he pays off with dividends then he's not doing anything wrong.

DLC?

There are only certain types of things you can expense on your business, last time I looked into it. Are you saying it's perfectly OK to put your entire life expenses through your IT Contractor Business Account, so long as you account for the expenses properly?

[Sockpuppet]

Nothing assuming he's accounting for it properly.

While it's bad form and a bit confusing if he has the mother of all P11ds or a massive DLC he pays off with dividends then he's not doing anything wrong.

[Peter Loew]

I know somebody who essentially lives off his business bank account for everything; rent, loans, car, food, beers, etc.. It surprised me and he has been doing this for years now.

If he happened to be investigated by HMRC, what would be the likely outcome?

And no, it isn't me.

P