In these troubled times where people are panicking about the safety of their money, can anyone see a flaw in the following scenario?
X Ltd has a March year end. Say the company owes £15k for 31/3/08, payable on 1/1/09. The money is in the deposit account earning a not very satisfactory rate of interest, along with say £30k extra, so taking us over the £35k government guarantee (whatever that might be worth).
I see on HMRC's website that they currently pay 4.75% on early payments of corporation tax
http://www.hmrc.gov.uk/rates/interest-ctsa.htm
So as the money is sitting in the deposit account anyway, maybe the company should pay the CT early, thus protecting the funds and earning a not too paltry interest rate?
I accept that the company could probably achieve a better interest rate elsewhere, but not that much, and the funds would then be safe too (I mean here of course that they have been paid and would not need to be found again if the bank failed. How "safe" the funds are in Gordon's hands is another issue entirely)
anon
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£50k state rate for individuals?
limited companies excluded etc
ie all investors other than individuals are the beneficiary of the govts new £ 50k......are they not ?
therefore would all LLP's, Ltd Companies, [ including ir35 ], trust ?, estate/executor accounts etc will be at risk for any money at any bank
would it be better to pop it into a solicitor client/ trust account.... are these not guaranteed by the law society ?
Strange tale from Old Grey
Very strange tale of yours, Old Grey !
I have several limited company clients with March year ends that pay their tax as soon as they know the amount of the liability.
This is always at least five months before the due date and I've never heard of money being rejected by HMRC.
I wonder if there's another factor involved in your client's case ?
A colleague tried this...
...they sent the money back saying they wouldn't accept it more than 30 days before the due date. I think they sent a cheque, don't know about an electronic transfer.
Thanks for the comments
Glad to see I am not going mad. I would be wary about depositing too much with HMRC though, as I could see problems with trying to get a refund in times of need - they are not always the speediest of movers....
Or what about this ?
If client had 60 grand in the bank then why not make a payment on account of 30 grand immediately.
Then don't submit the tax return until the end of December when they'll get a 15 grand repayment. Obviously, they can do this earlier if they need the ghoulash.
Once they get the repayment,, they can immediately make another huge payment on account of next year's liability.
And so on