Reply to: Putting company money on your mortgage

[THEPUMA]

I think you may be missing my point. It is easy not to advise people to do something that may be risky. I don't take the easy approach so therefore I do advise clients of the possibility of doing something which may be challenged, provided they are comfortable with the associated risk.

[tim123]

I am chartered and have the PCG QA accreditation.

It is very easy to advise clients not to do things because they may be challenged.

You seem to have missed the difference between "not advising clients not to do something" and "advising them to do it".

tim

[Nixon Williams]

It is very easy to advise clients not to do things because they may be challenged. I think that is lazy accounting.

I would agree that there are clients that would be intertested in what you say, my point is that when private/company money starts getting mixed up, this can lead to problems - in my experience clients that have done this sort of transaction get into difficulties, I see my role at trying to prevent that.

Clients are free spirits and can make their own choice......

Alan

[THEPUMA]

I am chartered and have the PCG QA accreditation.

It is very easy to advise clients not to do things because they may be challenged. I think that is lazy accounting. Some clients are interested in more aggressive arrangements than others but as an accountant it is my job to make sure every client is aware of the various possibilities available to them and the levels of risk attached to each.

If anyone can give me any legislation or case law that specifically precludes this arrangement I would be most interested to hear it.

The only thing I can think of is that a director is failing his fiduciary responsibility to the company but what are the ramifications of that? Normally, it is only the shareholders of the company who would tend to sue the director in these circumstances but in each of my cases, the company is wholly owned by the director and his/her spouse.

[Nixon Williams]

I am an accountant and several of my clients do this. None have yet been challenged. There was an article some time ago in Taxation which agreed that it was possible to do. I think the detail is important here. What I recommend is that the monies are transferred from the limited company account to an account named "on behalf of XYZ Limited". A deed of trust should then be signed by the company stating that the money is held on behalf of the company and is not available for personal use.

Even if it were to be successfully challenged, I believe there is still a saving. It is just subject to tax.

I would not consider it wise to advise this to clients, just because it has not been challenged does not mean it is ok - the Revenue can miss many things, it is always best advice in my view to keep private and company money separate.

Alan

[Ardesco]

I am an accountant and several of my clients do this. None have yet been challenged.

Are you chartered ?

[THEPUMA]

I am an accountant and several of my clients do this. None have yet been challenged. There was an article some time ago in Taxation which agreed that it was possible to do. I think the detail is important here. What I recommend is that the monies are transferred from the limited company account to an account named "on behalf of XYZ Limited". A deed of trust should then be signed by the company stating that the money is held on behalf of the company and is not available for personal use.

Even if it were to be successfully challenged, I believe there is still a saving. It is just subject to tax.

[DimPrawn]

Open an A&L business deposit account and stick it in there.

https://www.alliance-leicestercommer...t/SB020002.asp

Earn up to 4.85% AER (variable)*
Minimum balance £1, maximum balance £2million
No notice, direct access to your funds
10 free withdrawals per month and only £2 thereafter
Deposit money by post or electronic transfer (BACS)
Withdraw money from cash machines or via electronic transfer (BACS)
Managed online and via phone, fax and post

Easy.

[VectraMan]

I spoke to a colleague of mine who used to be a contractor and reckoned that you could do this... his logic was if you turn up to a bank and say "I want a mortgage" (they start to like you here) then you say "I also want to use you for my company's bank account" (They like you even more here) and "I have 100k to drop in it" (they're wetting themselves for your business now) that they will provide you with an offset (co money offsetting the mortgage); basically it looks from the company's POV that the money is in a bank but not earning any interest, and from a personal POV that you have a much smalller mortgage payment. He claimed that he knew someone that had done it, but didn't have any details.

I can see this is dubious, but the bank can charge you less interest if it wants to and give you less interest if it wants to. So this is not you mixing up your personal and company funds at all, rather the bank giving you preferential treatment because you've also chosen to use them for your business banking.

The company may be a seperate legal entity, but the decision as to where the company banks is made by the director (i.e. you) and you are the same legal entity as you.

[VectraMan]

I don't know about being able to link the two accounts for offset mortgages, but my Barclays login gives me an overall portfolio view of all my and MyCo's accounts together on the same page - in other words, I can view the accounts of two legal entities together.

Really? Mine doesn't. I have two seperate logins. The company one uses my surname, which always seems a bit odd, but they are completely seperate.

[dude69]

You get 3.??% with Cater Allen business acount, it goes up the more you have in. I switched from RBS and it made a nice surprise getting a big wad of interest rather than charges I periodically had to claw back after they ignored the agreed free banking agreement.

Alliance & Leicester is the best. 4%+

[meridian]

<snip>
Basically I don't think that any bank's systems would support it anyway - for the 'legal entity' reasons so eloquently cited by Boredsenseless.

I don't know about being able to link the two accounts for offset mortgages, but my Barclays login gives me an overall portfolio view of all my and MyCo's accounts together on the same page - in other words, I can view the accounts of two legal entities together.

[rootsnall]

well put in an account that pays interest
a couple of examples here, im sure that there are btter deals elewhere

You get 3.??% with Cater Allen business acount, it goes up the more you have in. I switched from RBS and it made a nice surprise getting a big wad of interest rather than charges I periodically had to claw back after they ignored the agreed free banking agreement.

[Ruprect]

Yeah, personally I thought he was talking b0llocks but just wanted your take on it. Meridian - thanks for your input - thats what I was thinking re interest "not earned"... Basically I don't think that any bank's systems would support it anyway - for the 'legal entity' reasons so eloquently cited by Boredsenseless.

EDIT: It would be good to get some feedback from the accountants too if you can be bothered!

[Pondlife]

Surely it's as simple as you using something that belongs to the company for personal benefit and therefore it should attract somesort of BIK - in this case the interest saved/earnt should be taxble.

Or it's you misusing company funds which is fraud.