Tax on expenses

Silenthill

Hi
Im starting an online business and am partnered with someone abroad.  His fees are 40% profit and he does everything.
So my question is, if I give him 40% profit and he invoices me for the amount, will I pay tax on it. Because its an expense?

QrizB

Exactly what is the structure of this business, and the relationship between you and your "partner"?

DE_612183

How can it be a partnership if he is invoicing you?

Is he just another business like your self?

As QrizB said - are you self-employed etc?

Silenthill

DE_612183 said:

How can it be a partnership if he is invoicing you?

Is he just another business like your self?

As QrizB said - are you self-employed etc?

Yes he is a business himself and his fees are 40% im operating a ltd

QrizB

Silenthill said:

Yes he is a business himself and his fees are 40% im operating a ltd

So, if I've got this right:

- You run a Ltd co

- I contract with you to provide goods/services at a cost of £100

- You subcontract with this other business to provide me with those goods/services for £40

If that's the arrangement, then yes I think the entire £40 is an expense for your business.

(There might be wrinkles depending on exactly what sort of business you're in.)

noitsnotme

It sounds like he is technically a "supplier" providing a service to you.  If so then yes any of his invoices will be an expense to your company and can be offset against profits for tax purposes.

DullGreyGuy

Silenthill said:

Im starting an online business and am partnered with someone abroad.  His fees are 40% profit and he does everything.
So my question is, if I give him 40% profit and he invoices me for the amount, will I pay tax on it. Because it's an expense?

how is "profit" being defined?

If its 40% of revenue then its simple, you're paid £100, you pay them £40 and the £60 is your profit for declaration for taxes assuming there are no other running costs but there likely will be you drawing a salary etc assuming this is your only line of work

Andy_L

Silenthill said:

Hi
Im starting an online business and am partnered with someone abroad.  His fees are 40% profit and he does everything.
So my question is, if I give him 40% profit and he invoices me for the amount, will I pay tax on it. Because its an expense?

Sounds well dodgy. Are you about to be scammed?

soolin

Andy_L said:

Silenthill said:

Hi
Im starting an online business and am partnered with someone abroad.  His fees are 40% profit and he does everything.
So my question is, if I give him 40% profit and he invoices me for the amount, will I pay tax on it. Because its an expense?

Sounds well dodgy. Are you about to be scammed?

I echo your concern and hope Op comes back to clarify. At worst this sounds rather like some of the scam businesses that are in effect money laundering devices or at best some dodgy drop shipping scheme. 

QrizB

Andy_L said:

Silenthill said:

Hi
Im starting an online business and am partnered with someone abroad.  His fees are 40% profit and he does everything.
So my question is, if I give him 40% profit and he invoices me for the amount, will I pay tax on it. Because its an expense?

Sounds well dodgy. Are you about to be scammed?

I did wonder about that, too!

DE_612183

QrizB said:

Andy_L said:

Silenthill said:

Hi
Im starting an online business and am partnered with someone abroad.  His fees are 40% profit and he does everything.
So my question is, if I give him 40% profit and he invoices me for the amount, will I pay tax on it. Because its an expense?

Sounds well dodgy. Are you about to be scammed?

I did wonder about that, too!

Depends if there is any initial outlay - but if the business model is:

I send you stuff
you sell it
you send me 40% of whatever you sell for
you keep 60% of whatever you sell for

Then you profit is the 60% - but you can't claim 40% of that is expense as you've already taken the 40% out.

We need a bit more detail to see how legal it is ( and also if it's that good I may want to try this myself! )