Preparing Accounts, paying claimable expenses out of the financial period.

[iandres]

Hi,
I'm tailoring my Accounts and Company Tax Return for HMRC and Companies House for my financial period (10/2015 - 11/2016), but I came up with a couple of questions and maybe somebody might help me here.

First, mine is a Limited Company, with low turnover, about 20k a year, I'm working with short period contracts but I did not declare myself as employee of the company, so I have no salary, I'm just taking money out with Dividends. So my questions are:

- Can I claim expenses? Travel, accomodation, food (when business trips I mean), mobile, computer, etc.

- If so, I paid those expenses with my Personal Bank account, and I want to transfer money from the Business bank account to the Personal one to cover those expenses but, and here my second question, I didn't do the transfer inside the financial period (10/2015 - 11/2016), so if I do the transfer now (March 2017), would it be correct? is that posible? I know I should have done that before but I din't

Thanks in advance!.

[SueEllen]

If you want useful answers from the helpful accountants on this site (or in fact any professional site) then you need to post in the working week not on a Friday evening, Saturday and Sunday. You now risk your post falling of the page so they won't see it.

[TheCyclingProgrammer]

I think, strictly speaking, the personal expenses you want to reclaim should be accrued under the accounting period in which they were incurred even if they weren't repaid to you. The unpaid expenses will simply then sit on your expense account as a company liability which you can repay at any time.

I'm often really lax at entering my expenses into FreeAgent and normally go back over my records and receipts and enter them after the end of the financial year on the date they were incurred before my accountant does my final accounts. I then just pay myself what I'm owed.

[Michael at BI Accountancy]

TCP is correct in stating that your accounts should be prepared on a accruals and prepayment basis. In laymans terms you should include all income/expenses in the period it relates to.

Any amounts that the company owes you back will sit in the directors loan account until a time that you repay it back to yourself.

Presuming you incurred the said expenses wholly and exclusive for business then that's fine, be sure to include the use of home allowance.

Couple of further points to be made:

- If you've had no further income in the tax year (outside ltd) then not running a salary through the company is a big error and may well have cost you hundreds if not thousands.

- Is there a reason behind going Limited based on your level of turnover? Might be more efficient to go sole trader (if the contracts allow).

[iandres]

TCP is correct in stating that your accounts should be prepared on a accruals and prepayment basis. In laymans terms you should include all income/expenses in the period it relates to.

Any amounts that the company owes you back will sit in the directors loan account until a time that you repay it back to yourself.

Presuming you incurred the said expenses wholly and exclusive for business then that's fine, be sure to include the use of home allowance.

Couple of further points to be made:

- If you've had no further income in the tax year (outside ltd) then not running a salary through the company is a big error and may well have cost you hundreds if not thousands.

- Is there a reason behind going Limited based on your level of turnover? Might be more efficient to go sole trader (if the contracts allow).

Hi,
basically because I'm picking up short contracts and travelling the spare time, so because I'm not living in UK the whole year I'm not sure that I would consider a UK resident, I just know that at the end of the year.

My previoius accountant told me that if at the end of the year I can't demostrate that I was a resident I could not receive salary for my Limited Company, is that true or I misunderstood this point?

Regards!

[Chart Accountancy]

It doesnt seem right what your accountant has told you. You can still receive a salary as a non-resident of the UK. If you are a British citizen or a national of EEA you will still be entitled to claim the same personal tax allowance as a UK resident. However, you will be taxed on your worldwide income in your country of residency. Though, you are likely to be still considered a UK resident even if you spend less than 183 days in the UK, if you meet the ties test. Do you have a UK home, or and a family in the UK (spouse, partner, children). There also additional critera in terms of numbers of days spent at your UK home depending on whether you were resident in the previous 3 years but this is something that your accountant would normally work out for you if you provide them with all your information.

With regard to receiving dividends from your company, you will not be entitled to the dividend allowance £5K, if you are not UK resident. If you are owed expenses, you will clear any amounts owed to you prior declaring dividends.

[iandres]

It doesnt seem right what your accountant has told you. You can still receive a salary as a non-resident of the UK. If you are a British citizen or a national of EEA you will still be entitled to claim the same personal tax allowance as a UK resident. However, you will be taxed on your worldwide income in your country of residency. Though, you are likely to be still considered a UK resident even if you spend less than 183 days in the UK, if you meet the ties test. Do you have a UK home, or and a family in the UK (spouse, partner, children). There also additional critera in terms of numbers of days spent at your UK home depending on whether you were resident in the previous 3 years but this is something that your accountant would normally work out for you if you provide them with all your information.

With regard to receiving dividends from your company, you will not be entitled to the dividend allowance £5K, if you are not UK resident. If you are owed expenses, you will clear any amounts owed to you prior declaring dividends.

Hi,
and thanks a lot for your response.

I didn't know about that restriction in the dividend allowance for non-UK residents, is there any similar restriction
for Personal Allowance?

And in my case, I am just taking money out from the Company through dividends, not through salary (thanks your your comments on this, I'll double check now), so I was assuming that I could claim my Personal Allowance (about 11k last year), am I right on this?

Cheers.