Contractors' Questions: What if my smartphone contract outlives my company?
Contractor’s Question: As a part-time task to the IT contract I’m doing, I wish to get into Android Apps so am eyeing a smartphone. It may cost £100 as an initial deposit and require a 12-month contract (or 18 months), but would ideally be met by my limited company business bank account.
However, my contract may complete in another three months, at which point I will close my limited company, so what would happen to the phone? If I close, would I have to sell the phone to myself, and pay the money back to the company account before closing?
Expert’s Answer: If you close your limited company while the phone is still under contract then your phone provider might require you to transfer it into your name, and yes, you would probably transfer the phone to yourself.
Depending on how much your company already owes you for unpaid expenses and suchlike, you might be able to do this without suffering additional tax, but you'd need to speak to your own accountant about that.
Alternatively, you might wish to keep your company for developing the apps, even if your contract ends. You might be able to claim research and development tax relief through your company.
The expert was Emily Coltman, chief accountant at FreeAgent, a provider of online accounting systems to freelancers and contractors.