Reply to: Spending HMRC's money

[sasguru]

Despite the image I may, may not have portrayed on here, I'm good at what I do and have made lots of valuable contacts.

So you're saying not an obnoxious cock with the mind of a teenager?

[Scrag Meister]

Yes, they will even pay you interest (0.5% springs to mind) which is a great deal if you're one of the lazy majority who keep it in a business current account.

Even my business deposit account pays some dire rate at the moment.

But most years I get a few quid back from HMRC for early CT payment.

Its not theres until the payment is due, so if you think you can make the money back by the time you have to pay it I see no problem in spending it

I'd never personally try this but WHS, imho.

Until the money is due you can use it, but it had better be available when the YE accounts are done and HMRC want there 20%.

[PAH]

But, if you got in a situation where you needed money that you didn't have except in the "HMRC account" - what would you do? Say medical bills or something important.

I'd tell HMRC to swivel. They'll then send letters threatening "distraint", which means they'll send the boys round for your stuff.

So it pays to have a storage container of all your old tat set aside for any bailiff visits.

You can always put an 'imported from China' sticker on the container and flog it to MF if it's not needed to appease the thugs of government.

[craig1]

But, if you got in a situation where you needed money that you didn't have except in the "HMRC account" - what would you do? Say medical bills or something important.

If my warchest went missing into the great banking Ponzi scheme at the same time as I had a major unavoidable expense, I'd break out the couple of credit cards I have with high credit limits. I think if needed I can spend about £40k on the cards without having to break open the piggy banks of my share accounts. They're the cards I use to pay for my travel then pay off instantly to keep them "alive" on the credit card company's system and not closed. I think of them as my emergency reserve that I hope never to have to use to pay essentials.

I've always been of the opinion that if you can't afford to contract with the occasional benching then you shouldn't be voluntarily contracting. I accept there are some contracting because they simply couldn't get another job and for them I'll make an exception to my rule... as long as they make an effort to build a warchest if they intend to keep contracting!

[d000hg]

I agree. HMRC's money is not mine and I treat it as such, it goes straight into a separate acct.

But, if you got in a situation where you needed money that you didn't have except in the "HMRC account" - what would you do? Say medical bills or something important.

[AtW]

WHS regarding WIS.

Advice is only bad if it turns out wrong.

But we both called him a moron, right?

[PAH]

Just for the record - I did not expect you to follow my advice (if any) given in this thread.

WHS regarding WIS.

Advice is only bad if it turns out wrong.

As a last resort, if I had a pending big bill and no imminent income, pay it by credit card, then balance transfer onto 0% deal to keep repayments low until income appears. If things don't improve you get the tax back the following year by operating at a loss, or something along those lines.

[AtW]

I realise some of you have posted "bad" advice in the hope that I'm a complete moron and would follow it sheep-like.

Just for the record - I did not expect you to follow my advice (if any) given in this thread.

[Chaffinch]

Thanks for most of the replies on this thread.

I realise some of you have posted "bad" advice in the hope that I'm a complete moron and would follow it sheep-like.

Some good advice in amongst it though so

[SneakySimon]

Warchest

When I started contracting had massive outgoings (debt!) and a sick wife. My 'warchest' consisted of any available credit on my credit card and the time differnce of paying VAT and Corp Tax were life savers. Its scary and as I think back, god knows what would have happened if I had been benched / sick but hey ho, everyone has there own methods!!

[craig1]

This has been discussed on here before, but my approach is that my warchest is MY money in MY bank account and does not take into account any "extra" (non-CT, VAT, PAYE money) in myLtd bank account.

Having only 4 months (by your estimate) maybe 2 months (by my estimate) warchest as a contractor scares the life out of me.

Each to their own of course!

I agree. HMRC's money is not mine and I treat it as such, it goes straight into a separate acct. I have a business reserves account where my VAT goes immediately on receipt and a personal savings acct where my accrued tax goes whenever I take profits from the company*. I guess I'm old-fashioned in the aspect that I refuse to follow the modern money-usage practices of aggressive money use but then I'll never be in the position to get the rubber glove treatment from Hector over unpaid taxes.

* LLP, so profits, not salary/dividends.

[Chaffinch]

This has been discussed on here before, but my approach is that my warchest is MY money in MY bank account and does not take into account any "extra" (non-CT, VAT, PAYE money) in myLtd bank account.

Having only 4 months (by your estimate) maybe 2 months (by my estimate) warchest as a contractor scares the life out of me.

Each to their own of course!

I was being conservative with 4 months. That doesnt include my personal savings and would be financed from profit from the company. If I had to I could draw on my savings too - but that would be a dark day indeed.

I'm not scared as I've not had one day out of work in the 20 years I've been working!

Despite the image I may, may not have portrayed on here, I'm good at what I do and have made lots of valuable contacts.

[jmo21]

I guess I've just backed myself to find another contract when out of this one.

I have a small warchest - enough for 4 months, its only just struck me - what happens if I'm benched longer?

This has been discussed on here before, but my approach is that my warchest is MY money in MY bank account and does not take into account any "extra" (non-CT, VAT, PAYE money) in myLtd bank account.

Having only 4 months (by your estimate) maybe 2 months (by my estimate) warchest as a contractor scares the life out of me.

Each to their own of course!

[d000hg]

Is it not possible to pre-pay the CT? Thus reducing the temptation.

Yes, they will even pay you interest (0.5% springs to mind) which is a great deal if you're one of the lazy majority who keep it in a business current account.

[PAH]

Close the company before the corp tax is due and open another for future contracts.

If you've 'spent' all the money and there are no assetts or anything for them to try to grab then they can't do much about it. The company is insolvent.

People do this all the time, even some agencies (). Look up phoenix companies.

Have those loopholes been closed yet? I guess not, must be plenty of rich folk profiting from them too.