Probably an easy answer
I have a new client who is a consultant working through his own Ltd Company. The company was incorporated in February 2011.
In the process of preparing his first set of accounts for the year ended 29 February 2012.
He has asked to put through pre incorporation expenses totalling £10k which date back to July 2010 so we are talking 7 months before incorporation. I have asked the client to confirm that they were all necessary in forming his Ltd Company and he has said the following which has got me worried:
"All of these above costs were prior to incorporation, but so was the bulk of the work that generated income. I would estimate perhaps 75% was done prior to incorporation and then billed immediately after incorporation."
My question is simple - can he put this income and expenses from before he incorporated through his Ltd Company like this or should it be reported as Self Employed income (he was not registered as self-employed) or even employed income.
To the best of my knowledge there were no contracts in place for the work carried out and if there were then they could not have been between the end client and his Ltd Company as it would not have existed.
Any help and advise (more than "walk away" from the client - which I am contemplating) would really be appreciated.
- Thinning income 353 4
- Allowable for Corporation Tax? 258 6
- Bank Statement Scanning Software? 145 2
- Work to Rented Business Premises 171 1
- Not a question but made my day 1,172 23
- Directors, service companies and national minimum wage (NMW) - Profit extraction 385 11
- Employee leaving mid month and Payroll Manager 1,151 24
- IHT400 or IHT205 - disagree with solicitor 139 1
- Amending 13-14 sole trader return to reflect increased profit in 14-15 272 4
- I forgiven loan an Output? 171 2
- V T Software 232 2
- How do I know if I have to apply a reverse charge mechanism 144 3
- SA302's - What's the deal? 352 4
- tax credits 295 4
- Past rental expenses 134 1
- What do do about VAT? 553 15
- Buying a company for £2000 from owner how it works? 299 5
- Vat Exemption moving to a partnership 196 2
- Audacity 1,330 22
- Seeking advice: Paying Funeral Costs 696 8
- NHS finance professionals 599
- Auto Enrolment and Foreign employers 390
- Foreign Pension Contribution 363
- vat gross profit percentage margins 334
- Employee's statement of sickness (SC2) form - no longer available as downloadable pdf 326
- Pre Season Invoice dated September how do you treat the VAT as not due until May 16 306
- SWAT AML v Anti Money Laundering Compliance Plus (AMLCP) 275
- Does pension term assurance count for unused relief purposes? 232
- Quickbooks online filing of VAT 209
- IFA income recognition & reporting 200