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Lyd


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Bookkeeping , MLR ...
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Hi

I am doing bookkeeping for a company that i use to be employed with but am now self employed.

Due to the fact the business is relatively new, they have very little in the way of credit and alot of over head expenses..

The owner however needs to have the books done and since he feels the company can't sustain me wishes to pay me self employed out of his own pocket.

I therefore raise invoices on my side to keep my taxes right.. however since it is him personally paying and not the LTD business there has been no purchase invoices raised on his business account, effectively i am not in contract with the business but rather the individual..

 

What way does this work for MLR? i have done checks on the person, do i need to question every monthly payment i receive from him if cash ?, the payments are small and would only amount to a couple of 100 a month as its only small amount of work



-- Edited by Lyd on Tuesday 13th of June 2017 05:13:55 PM

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Shamus


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Bookkeeping for a business, but the director wishes to pay from his own money & and not the business ...
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To not put the expense through the business means that the director will pay more tax than they need to and also be out of pocket personally.

Even if they pay you directly the transactions should be to take the money paid to use as a loan to the company via the DLA (DLA isnt just for when directors borrow from the company. Think of it as a directors personal account with the company).

Your invoice is still to the company, not to the director.

As for MLR... You are working for the business regardless as to whether the director is paying you directly (which you will cycle via the DLA) so everything really is just as normal for your MLR checks.

HTH,

Shaun.


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Shaun

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Lyd


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Thanks for the quick response,
I have done checks on the business with regards MLR, I'm slightly confused with HMRC website in relation to "source of funds" i have risk assessments for clients, my business, company policy and "know your client" documents all set up. However this client has got a loan himself as his business was too new to apply for one, so he has paid me small amounts of cash, on HMRC website it seems only need to find source of funds if over 15,000, is this the case or do i need to question if i am paid in cash at any point and if so is a reply from the person of where the money came from enough to keep me compliant with MLR.



-- Edited by Lyd on Tuesday 13th of June 2017 05:22:06 PM

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abacus12345


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Lyd wrote:

Hi

I am doing bookkeeping for a company that i **use to be employed with but am now self employed.

Insurance, P.Certificate etc. Also, contract for service or for services? 

Due to the fact the business is **relatively new, they have very little in the way of credit and alot of over head expenses..

Kind of irrelevant (apart from the 'use to be employed (sic) / relatively new')

The owner however needs to have the books done and since he feels the company can't sustain me wishes to pay me self employed out of his own pocket.

I'm starting to feel worried.

I therefore raise invoices on my side to keep my taxes right.. however since it is him personally paying and not the LTD business there has been no purchase invoices raised on his business account, effectively i am not in contract with the business but rather the individual..

I don't get why he would pay you out of money already taxed? Surely it is better to 'expense' you before hand?

What way does this work for MLR? i have done checks on the person, do i need to question every monthly payment i receive from him if cash ?, the payments are small and would only amount to a couple of 100 a month as its only small amount of work

It doesn't matter if it is £1 or £1,000,000 when it comes to AML/MLR 

-- Edited by Lyd on Tuesday 13th of June 2017 05:13:55 PM

 



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Shamus


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Morning Johnny,

I saw that first line but didn't want to complicate matters too early on with discussions about disguised employment. But, now that it's been touched upon I'm hoping that Lydia has several clients, not just one.

I could be reading this completely incorrectly as I only have what has been written thus far to go on. But I'm seeing it as another company with little money attempting to avoid pension and other employee rights obligations by taking staff off payroll. You cant blame them for that as small businesses are being crippled by the cost of employing staff as the Government attempt to pass their own obligations on to employers (Tell me that the long term goal for AE is not to break the link between NI and Pensions).

We're in agreement over expensing the payments. Should definitely be cycled via the DLA... And a the bookkeeper one should really be advising the client of that in order to reduce their long term tax liabilities (short term I get the impresssion that they're not making a profit anyway).

And there's another issue. We cannot just look at this from the perspctive of double taxation.

If the client is attempting to use their books in order to raise finance but not all expenditure is being put through the books then profits would be artificially boosted... Which is fraud. When something similar (but on a bigger scale) happened in the case of RBS vs Bannerman, Johnsone, Maclay and others (2002) the only one to actually do jail time was the poor old one at BJM doing the bookkeeping!







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Shaun

Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Cheshire


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IR35 popped into my head the minute I read this and I agree with Shaun - depends on how many other customers you have Lyd, plus a few other things, but if you consider this one should be employing you due to that then you should be having a word!

Agree with the boys - you should be invoicing the business and you should be telling him this as his bookkeeper. If the shareholder director then pays you out of his own pocket then just allocate the payment via the DLA. Anything else would provide misleading figures.

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 Joanne 

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Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position
Lyd


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Hi guys,
Yes I do have other clients, I will put the payments through the DLA
Thanks

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HendyPhilhendy


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You also need to make sure your charge out rate is significantly increased to take account of your overheads and business risk.

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