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Can I have Ltd company funds on my sports gambling account? (legit reason)

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    Can I have Ltd company funds on my sports gambling account? (legit reason)

    Hi everyone!

    It was a bit hard to write a title for this, I'm sorry if it's confusing. I'm a contract software engineer and since last year I've been working on a mobile application outside of my contracts in an attempt to build another source of income for my company.

    I've been claiming some of the associated expenses but there's one I'm not sure about, given the nature of the app. Essentially this app will have a mechanism of placing orders on Betfair (could be other sports exchanges too) and will do so in a semi-automated manner, effectively applying a strategy that would otherwise be harder to do manually.

    I've been using my own money to test how the app works on a production environment (some conditions can't be replicated) and obviously there are errors and before the strategy and functionality of the app is final the likelihood is that money will be lost in the process (e.g, app crashes before closing the position).

    My question is, would it be acceptable/legal for me to use company funds to do all the testing I need to in order to finish the application, given that all revenue generated from it (will be subscription-based) will go to the company? I understand this is a bit of a grey area but I'd like to know your opinions. Thanks in advance

    #2
    I would probably let the company pay for it and keep detailed records of every transaction but I'm undecided on whether or not it would be tax deductible against the company's corporation tax bill. It might be safer, as a compromise, to pay for it through the company but add it back when calculating taxable profits.

    You could argue that you're not gambling (which isn't tax-deductible) and that it's just a development cost. Definitely one to run past your accountant.

    Comment


      #3
      Originally posted by TheCyclingProgrammer View Post
      I would probably let the company pay for it and keep detailed records of every transaction but I'm undecided on whether or not it would be tax deductible against the company's corporation tax bill. It might be safer, as a compromise, to pay for it through the company but add it back when calculating taxable profits.

      You could argue that you're not gambling (which isn't tax-deductible) and that it's just a development cost. Definitely one to run past your accountant.
      I’d go the other way on this. Profit on gambling is free of tax, unless it’s a company where CT is applicable.
      So it all depends on the tax level being paid by the OP. If 7.5% dividend then it would be better use personal money.

      CAVEAT: all that assumes an expected profit.... If not then... well...just stop.....
      See You Next Tuesday

      Comment


        #4
        I'm surprised that gambling profits are taxable for corporation tax - does that mean that stakes are tax deductible? If so I'm surprised.

        But unless I'm misreading OP, I thought they were just placing small stakes as a test with no intention of making a profit, so even if they don't claim a tax deduction against the CT bill it's probably still OK for the company to pay for them like any other business cost rather than out of their post-tax personal income (the same reason why it's still worth putting an IPSE membership through the business even though it's not tax-deductible).

        Comment


          #5
          Thank you for your replies, very useful! Just to make it clear, I'm not planning on using the application functionality as a way to make profits (or losses) for the company. The only way the company would make money is by selling subscriptions and the money made from the testing (if any) would stay on the account and I'd just take the initial investment out when the application is finished. I see it as a regular business expense paid by director, just like the production API key I'll need to buy before the app goes live.

          Not sure if it complicates anything but the Exchange account is personal (can't have a company account as far as I'm aware), so on the statement there will be my normal activity + the testing activity too. I'm definitely going to run this again through my accountant, I'm sure I've done it once but the reply was not conclusive on any way shape or form xD

          Comment


            #6
            Originally posted by TheCyclingProgrammer View Post
            I'm surprised that gambling profits are taxable for corporation tax - does that mean that stakes are tax deductible? If so I'm surprised.
            It was an assumption I made. I have tried to find something to back it up but cannot.
            On that basis I'd suggest that the question goes to an accountant.
            See You Next Tuesday

            Comment


              #7
              I asked my accountant and just been told that it's risky to do that because HMRC might want to investigate and will likely say there's a "duality of purpose" on having a gambling account with company money. The account statement would have my own personal activity mixed up with the testing activity and would not be easy to identify which is which using the normal channels (website). I think this puts me in a rather unfair position because I have to tank it myself, and I'm still not 100% convinced with the answer...

              The way I see it:

              1. My company wants to develop an app
              2. The app needs to be dev/tested with real funds
              2. My company assigns a budget for that internal project, say £5k
              3. Employees can use that budget for any associated expense (trading funds, hosting, domain, design work, etc etc)

              The way HMRC sees it:

              1. Your company wants to develop an app
              2. The app needs to be dev/tested with real funds
              3. Therefore, your employees are expected to use their personal funds, or yours to carry on with the required work

              I'm not sure how companies that build trading platforms (CFDs and Spreadbetting specifically) do this, I'm sure there are "simulated modes" (not on my case tho) but at some point the platform has to be tested in production conditions with real market feeds with expected latencies and stuff like that.

              Comment


                #8
                Originally posted by Fabs View Post
                I asked my accountant and just been told that it's risky to do that because HMRC might want to investigate and will likely say there's a "duality of purpose" on having a gambling account with company money. The account statement would have my own personal activity mixed up with the testing activity and would not be easy to identify which is which using the normal channels (website). I think this puts me in a rather unfair position because I have to tank it myself, and I'm still not 100% convinced with the answer...

                The way I see it:

                1. My company wants to develop an app
                2. The app needs to be dev/tested with real funds
                2. My company assigns a budget for that internal project, say £5k
                3. Employees can use that budget for any associated expense (trading funds, hosting, domain, design work, etc etc)

                The way HMRC sees it:

                1. Your company wants to develop an app
                2. The app needs to be dev/tested with real funds
                3. Therefore, your employees are expected to use their personal funds, or yours to carry on with the required work

                I'm not sure how companies that build trading platforms (CFDs and Spreadbetting specifically) do this, I'm sure there are "simulated modes" (not on my case tho) but at some point the platform has to be tested in production conditions with real market feeds with expected latencies and stuff like that.
                So are you a gambler and wish to continue gambling mixing your company money and your own money?
                Create a new/company named account then it keeps everything separate

                To test whatever it is your doing, I assume you could use very small bets (pennies or single pounds) - but now it sounds like you want to drop 5K on something?

                Comment


                  #9
                  Originally posted by Fabs View Post
                  just like the production API key I'll need to buy before the app goes live.
                  No test environment??

                  Comment


                    #10
                    Originally posted by pr1 View Post
                    So are you a gambler and wish to continue gambling mixing your company money and your own money?
                    Create a new/company named account then it keeps everything separate

                    To test whatever it is your doing, I assume you could use very small bets (pennies or single pounds) - but now it sounds like you want to drop 5K on something?
                    Will a betting company let you setup an account using a business bank account???
                    Is that the actual problem the OP won’t say?
                    See You Next Tuesday

                    Comment

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