How can a ltd company invest cash surplus

Ltd investing - no business bank account

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Hello,

My name is David and I am the director of a ridiculously small ltd. company. I was duped into forming a ltd. company in order to give me a job. They didn't tell me in advance that this is what I was required to do, until after I signed the contract.

The money I make is around £120 a week and there is about £20 in travelling a week. It's a zero hours contract and they can finish with me at anytime.

Obviously I am free to try and get more work and I have had other ad hock pieces of work throughout the year.

Last year the company received a total of £8k in sales with expenses of £2k, so of course there is no tax or national insurance.

Now I know I could have had a ltd company bank account, but after the first 12 months I estimate it would cost me £95 a year for absolutely nothing! So I have been using my personal bank account for the business and everything has been OK.

Now I have come to the end of the 1st year, I find I have a surplus of £1k (just over) and I would like to invest it. I am finding that I can't find an account to invest it in, because I don't have a business bank account. There is no point to have a business bank account costing £95 a year for a return of around £13.

Now, I hear you cry, why don't you invest the money through your personal current account. Well....this is where it gets more interesting.

I owe HMRC around £8k in back self assessment fines and tax. I might dispute the amounts, but my ability to keep records has always been extremely poor. This is why I didn't want to go into business anymore. That said, if I put the money into an investment in my name, HMRC can now 'come and grab it' as they have changed the law, so they can do so. This money is cash sales and it belongs to the ltd. company, it doesn't belong to me. I can see myself in court suing HMRC for grabbing money that belongs to the business. I can see the judge throwing me out saying, I need to make it right with the business and so HMRC can keep the money they took. Every bank note I have is tracked to a sale, so I can prove the money belongs to the business, but if I deposit it into my bank account, at that point it's mine.

I tried buying scrap gold, but no jeweller would sell it to me. I want to invest the money, in the name of the business. Anyone got any ideas? I can't do peer to peer lending as I need to have the ltd. bank account.

I am not going to invest in my business because the business is going nowhere. It is more of a question of how long it lasts rather than anything else.
 

Replies (11)

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By Tim Vane
01st Mar 2017 01:02

Why do you think there is no tax due? On the figures given the company has a tax bill of over £1,000, which is not far off the money you think you have available to invest.

That money belongs to the tax man, so don't spend it, don't invest it and don't dig yourself a deeper hole than you are already in.

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By mrme89
01st Mar 2017 07:04

Overdrawn directors loan account. You probably have one.

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By johngroganjga
01st Mar 2017 07:52

From what you say you must owe the company £6,000.

Your "0f course there is no tax or national insurance" makes no sense. Why do you think your company will not have to pay corporation tax at 20% on its profits (£1,200 in your case) like every other company.

You need £1,200 to pay the company's corporation tax and £8,000 to pay personal income tax and penalties. You say you have "just over" £1,000. If that is the only liquid resource you have you are insolvent and need to take advice on that position immediately. The fact that you think the main issue you need to address is how to invest the only liquid resource you have suggests that you completely misunderstand your financial position.

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By Wanderer
01st Mar 2017 08:32

As your occupation is

Property Development, Training And Investment

don't you know enough to advise yourself?

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By Duggimon
01st Mar 2017 09:09

You're an idiot. Get an accountant. You should have had no tax to pay but because you were too cheap to get the proper advice required up front you now owe £1200 in tax and likely another £2K or so on S455 tax on your director's loan.

Also I've never seen a company with 101 shares at 0.9901 pence each so well done on the originality.

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By ireallyshouldknowthisbut
01st Mar 2017 09:12

It would pay you well to get some advice rather than playing "lets pretend I know what i am doing" and imagining what HMRC can andcannot do.

Presumably you have gotten into this mess (such as the £8k you owe HMRC) from thinking you dont need advice, but you do.

Of course such advice will cost 2-3 times as much to dig you out of the current mess than had you had it upfront, but it would appear entirely of your own making.

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Replying to ireallyshouldknowthisbut:
By Duggimon
01st Mar 2017 09:32

I would also add that the advice will likely cost less than the (probably entirely) unnecessary tax bill you now have.

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Teignmouth
By Paul Scholes
01st Mar 2017 15:08

Very easy to be demeaning and rude but difficult to give proper advise without more info however from what you say, have you thought of putting through a salary to yourself of up to £112 pw, this, I think will avoid any PAYE probs and will add to the company's costs to reduce its tax bill?

At only £1K I'd not be looking to invest any of it, especially as, using your own bank account you are already at risk of not having accounted properly for the company's money so, off the top of my head, I'd pay HMRC for any company tax and close the company.

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By eynesltd
02nd Mar 2017 19:30

Hello everyone,

Well thank-you for your input. I am not doubting you are all correct with what you say. I would have hoped rather than throw insults at me, you might have given me advice on how to avoid payment of tax. I have a personal allowance of £10K or whatever it is and yes, I have taken £6k (more or less). So, how do I take the money out and not pay any tax?

I am not going to hire any book-keeper or accountant, but constructive, professional advice is always welcome.

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Replying to eynesltd:
By mrme89
02nd Mar 2017 19:43

Constructive, professionals advice usually comes at a cost.

It has already been pointed out to you what a pigs ear you are making of it. Only a fool would carry on as they are.

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Replying to eynesltd:
By Ruddles
02nd Mar 2017 20:36

eynesltd wrote:

So, how do I take the money out and not pay any tax?

I am not going to hire any book-keeper or accountant, but constructive, professional advice is always welcome.

Already in the running for comment of the year. It's going to take some beating.

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