Business Offset Mortgage

owner

As I said in my last post, I asked my accountant and he said that I couldnt; use the company accounts like a personal bank account and I always had to have enough money in my company to meet it's tax obligations (Corp tax and VAT).

The money does exist in your 'company' just not in the company a/c. My accountant is ok with this and has been for the past 4 years.

lesley1960

nick_hill wrote: »

Have a look on here

http://www.bankofscotland.co.uk/corporate/funding-solutions/business-offset/mortgage/index.html

for the bank of scotland product

Nick

Thanks for this link , we have a business mortgage with the BOS and this is the first i had heard of this , just emailed my manager for more info

lesley1960

Dithering_Dad wrote: »

until you get an audit from the Revenue...

How can you justify taking what amounts to an interest free loan from your company? You're getting a financial benefit from this, yet not declaring it anywhere.

As I said in my last post, I asked my accountant and he said that I couldn't use the company accounts like a personal bank account and I always had to have enough money in my company to meet it's tax obligations (Corp tax and VAT).

If you contact the Revenue (anonymously of course) and ask them if this is legal I'd be amazed if they said it was. Just because you're doing it and (currently) getting away with it, doesn't make it legal

there is no problem with using a business account for personal transactions , you just need to account for them
A bank account is only a vehicle for holding your funds , if you wished you could put all your cash into jam jars ........

The revenue would be interested in anything that could be construed as benefit in kind though

Dithering_Dad

lesley1960 wrote: »

there is no problem with using a business account for personal transactions , you just need to account for them
A bank account is only a vehicle for holding your funds , if you wished you could put all your cash into jam jars ........

The revenue would be interested in anything that could be construed as benefit in kind though

They're not all your funds though. The VAT money you have added onto the top of your invoice and collected for customs & excise is their money, not yours. 19% of the money you bring in is the Revenue's money in the form of Corporation tax (after expenses) and so this is their money, not yours.

Regardless of what accountants tell you, if you are audited it's you not them who have to pay a fine and stump up the cash for the benefit in kind. If you want to convince me then please show me a notice from the revenue that says it's ok to take money from the bank account and not account for it.

I'm not having a go, I just want to make sure my MSE chums are not passing on bad advice or doing anything illegal!!


p.s. I did a quick google search and found this on a contractor website (http://www.contractorcalculator.co.uk/company_money_mortgage_offset.aspx)

It has the following summary to the article:

Conclusion

Using company money to offset your mortgage is not possible unless you take a directors loan of up to £5,000. A loan that small, compared to your mortgage would not have a significant impact on reducing your mortgage and would only encourage the revenue to investigate you.
Paying yourself dividends out of tax money is illegal and you could find yourself in serious trouble.

What "owner" is doing is even more illegal than taking dividends from tax money - he's just taking the tax money and not leaving any sort of accounting trail (except for the bank account transactions that an auditor will ask for). Owner - if I were you I would ask your accountant to tell you in writing that it is OK to remove your corporation tax and VAT money from company accounts for personal use (in fact I'd also ask him to confirm that you can remove any monies from your company bank account without accounting for it). You can at least use this as part of your defense if you ever get audited. You would be able to sue your accountant for bad advice and perhaps cover the fine.

What "Lesley1960" is saying is that you can use a business account like a personal bank account (or jam jar). Not true because the tax money MUST remain in your business bank account - your company must be able to meet its tax responsibilities at all times.

nick_hill

Thanks for that DD

So thats where the 5K came from.

Sounds like its a no-no then but hopefully we have given others food for thought.

The search continues

Nick

Dithering_Dad

yes, a shame really .

I've put my corporation tax into a higher rate, 30 day notice deposit account (business bank account, NOT personal) so that at least it's earning a bit more interest than the standard reserve account that I use to hold my other company money.

nick_hill

Then they tax you on the interest you earn!!!

I must admit that there are guys where I work that do as Owner does. But no matter how many people do something it doesn't make it legal.

cheers

Nick

owner

Hmm, I'd better have a word with my accountant then ! :rotfl:

For what it's worth I have always left more than enough to cover VAT/Corp. Tax payments in the company a/c (By luck rathe rthan judgement), so in effect I have only 'borrowed' retained profits to offset thus saving personal tax on the divi.

Dithering_Dad

lol, nice one owner.

I suppose if we "drink from a half-full glass" we could say that we're earning interest on the government's money. If we had to pay CT on a monthly basis rather than by 9 months after company year end we wouldn't have the money available to offset or earn interest on.

nick_hill

And we we were paid in cash and kept in in Jam jars rather than bank accounts they would be no the wiser.

Maybe we should get corp tax pigs as well as mortgage pigs!!

then every month take the money out of the business account to place in the pig. As long as you have the cash available when the demand comes you'll be laughing.

Nick