Donations from Directors to Company Ltd by Guarantee

Donations from Directors to Company Ltd by...

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If the principle directors of a company limited by guarantee were to make a "donation" to the company in order to pay for some overheads, how would the donation be treated within the company? The directors do NOT want these to be credited to their director loans so should these donations be treated as 'Other Income' or Credited to the overheads that have been met by the donations?

I assume that if the same were to happen to pay for fixed assets then the 'donation' should be deducted from the asset cost?

Thanks in advance!

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By Stuart.thomson
17th Mar 2015 22:40

Depends on whether the company was responsible for entire cost (considering substance over form) in which case treat as other income or if not net of against cost in the stat accounts. Given you have indicated that the o/h are the company's issue then I would treat as other income and recover full VAT (and not charge VAT on income as a donation).

The balance sheet impact is slightly different as the liability does not exist so it has to be netted off in stat accounts. The difference with the P&L is that it is by its nature showing more detail.

In the day books there cannot be a net off as that breaches CA legislation so separate account code potentially.

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