Reimbursing startup costs + overseas supplier

heygaoming

Hey all,

I have recently set up a catering trailer business and I source the products from an overseas supplier.

My son has paid for most start up expenses such as domain registration, email hosting, company formation agent fees and so on.

He also paid one supplier (around £15k in total) using his own personal credit card prior to my company being incorporated and voluntarily registered for VAT. 

What’s the best way to reimburse him for the start up expenses and claim back VAT?

The invoice from the supplier has my new company’s name on it too. How can I make sure this is included in my accounts despite my company not physically paying it for it?

Thanks!

DullGreyGuy

What is your son to the company?
Does the company have any money to repay him at the moment?

As you have formed a company you have to use accrual accounting, companies cannot use the cash accounting that sole traders can. As the invoice is in the company's name it will include the VAT to be paid in the appropriate field on the quarterly VAT return and partially offset the VAT you've billed your customers in the same quarter

heygaoming

DullGreyGuy said:

What is your son to the company?
Does the company have any money to repay him at the moment?

As you have formed a company you have to use accrual accounting, companies cannot use the cash accounting that sole traders can. As the invoice is in the company's name it will include the VAT to be paid in the appropriate field on the quarterly VAT return and partially offset the VAT you've billed your customers in the same quarter

My son has no role in the company at the moment. 

The business bank account is being finalised as I type too, so there is no money in the account yet.

The products are on their way to the U.K. now and will be sold on arrival. I should be able to claim back the import VAT at the next quarter.

DullGreyGuy

heygaoming said:

DullGreyGuy said:

What is your son to the company?
Does the company have any money to repay him at the moment?

As you have formed a company you have to use accrual accounting, companies cannot use the cash accounting that sole traders can. As the invoice is in the company's name it will include the VAT to be paid in the appropriate field on the quarterly VAT return and partially offset the VAT you've billed your customers in the same quarter

My son has no role in the company at the moment. 

The business bank account is being finalised as I type too, so there is no money in the account yet.

The products are on their way to the U.K. now and will be sold on arrival. I should be able to claim back the import VAT at the next quarter.

You won't be "claiming it back", you will be offsetting it against the VAT you have to charge as presumably you are going to be selling them for more than you've paid for them

You buy them for £15,000 so pay £375 duty and £3,075 VAT on import 
You sell them for £36,000 so £30,000 for you and £6,000 VAT

When you do your VAT you pay HMRC £6,000 - £3,075 = £2,825 VAT to HMRC

heygaoming

When my company has enough money to reimburse my son, would I simply transfer the money from the business account to his personal bank account?

Thanks for your help!

penners324

Yes that's exactly what you do