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.
- Should replies on AWEB show details of the qualifications 108 4
- Personal allowance 634 14
- New Fangled Penalties 1,099 1
- Can I record depreciation, prepayments and accrued expenses in cash accounting? 117 1
- Does Members voluntary liquidation require change of year end 86 1
- What do you all do in your spare time? 711 30
- Are Court and tribunal Judges honest/commit fruad ? 799 9
- TaxCalc - A Return to Form 265 3
- New client has not reported director's pay by RTI 371 10
- VAT on employee loan 288 5
- Taking over from an on-line accounting firm. Any ideas? 948 18
- Charging VAT on a company loan ?. 134 2
- Accountants website 382 5
- VAT on long lease in comercial property that has opted to Tax 168 5
- So who has completed a 2015 tax return then? 468 8
- Threshold company limited by guarantee. 99 1
- Retrospective VAT Claim 114 1
- Auto Enrolment - Director Only Answer 1,411 20
- SAGE 50 PAYROLL YEAR END 224 5
- Can software startup claim VAT refund during development? 176 6
- Moving away from CCH software 939
- QROP pension input amounts 431
- write off loan or loan to equity swap or both 375
- HMRC BENCHMARK EXPENSES 346
- Unused Losses and Post Cessation Receipts 313
- fraud 272
- EIS relief on transferring shares to spouse 243
- Sole trade business in UK, but the owner works from EU 215
- Construction CIS LLP Company 195
- EPS and CIS deductions 188