LTD Company, Agency and payment

keyser666

Had a substantial payment yesterday made to my personal bank account for my monthly salary.

This was refused by my bank and sent back because it was in the name of my limited company. This has not stopped my bank from accepting it before.

My agency are now saying that they cannot pay it direct to me and that I shouldnt be using my personal account. As far as I am aware it is not illegal to use your personal account for payments, granted it is messy accounting wise but it works for me.

They said that we will sort this out on Monday and I have financial commitments to keep.

Why are they saying I am not allowed to use my personal account? What options are available to me now to receive this payment?

gb12345

keyser666 wrote: »

Had a substantial payment yesterday made to my personal bank account for my monthly salary.

This was refused by my bank and sent back because it was in the name of my limited company. This has not stopped my bank from accepting it before.

My agency are now saying that they cannot pay it direct to me and that I shouldnt be using my personal account. As far as I am aware it is not illegal to use your personal account for payments, granted it is messy accounting wise but it works for me.

They said that we will sort this out on Monday and I have financial commitments to keep.

Why are they saying I am not allowed to use my personal account? What options are available to me now to receive this payment?

So you operate through a Limited company as a contractor? Is that correct?

And the Ltd company has a contract with the agency for your services, for which the agency pays the Ltd company (but has gone into your personal bank account).

Does the Ltd company have its own bank account?
Do you/the Ltd company have an accountant? If so is he/she aware that you do this?

keyser666

gb12345 wrote: »

So you operate through a Limited company as a contractor? Is that correct? Yes

And the Ltd company has a contract with the agency for your services, for which the agency pays the Ltd company (but has gone into your personal bank account).Yes

Does the Ltd company have its own bank account? No
Do you/the Ltd company have an accountant? Do my own accounts
If so is he/she aware that you do this?

as above gb

gb12345

keyser666 wrote: »

as above gb

I think you have a major problem then and you need to see an accountant ASAP.

The Ltd company is a separate legal entity and it should have had its own bank account which your "fees" from the agency (which is not your salary) should have been paid into - you would then have taken a salary/dividends from that money.

You have now quite possibly opened yourself up to major IR35 problems and HMRC could argue that the Company is just a tax dodge and as agency have been paying you directly you should be taxed on the money you have received. What have you been doing about tax? How have you worked out what is due?

To answer the final questions in your original post:
Yes the agency can do this and the Ltd company needs to have its own bank account set up to receive the payments.

keyser666

Thanks I put away approx 25% of money received for tax and pay oiut of that, I do my own books at the end of they year and normally find I take home about 83% of earnings so always have some tax money left over.

I know other contractors who have done it this way and there is nothing illegal about it. Just now need to see how I am going to get paid on Monday as they rightly so will not send the payment in my name.

gb12345

keyser666 wrote: »

Thanks I put away approx 25% of money received for tax and pay oiut of that, I do my own books at the end of they year and normally find I take home about 83% of earnings so always have some tax money left over.

I know other contractors who have done it this way and there is nothing illegal about it. Just now need to see how I am going to get paid on Monday as they rightly so will not send the payment in my name.

I'm sorry, but any contractor who is receiving the money into their own account is doing something illegal. That money does not belong to the contractor it belongs to their limited company.

Do you pay NI and if so what type? What tax are you paying - income or corporation?

Do you submit your accounts to Companies House?

imoneyop

I agree with GB12345's assessment of the situation, the way you are operating your Ltd company is definitely not correct.

I would also question how you have managed to come up with an 17% tax rate, given that Corp Tax is 20% of profits and you are unlikely to have many expenses as a contractor (mine are mainly accountants fees and mine/wife's salaries, plus some small expenses for equipment occasionally).