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Can I post cost invoices before LTD registration?

Cost invoices issued prior to the registration of LTD

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My client has cost invoices issued in his full name as director that are dated prior to the incorporation of LTD, for example for an accounting consultation. Is it possible to post these invoices in the company's costs?

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By David Ex
15th Sep 2021 17:03

Some say yes, some say no. I’m a no.

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Replying to Wanderer:
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By Patrycja1233
21st Sep 2021 16:46

What would the posting look like in this case? Pre-incorporation cost invoices would be posted with the date of incorporation?

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By SXGuy
15th Sep 2021 17:14

You've already said invoices are issued in the name of the director so forgetting the company didn't even exist at that point. Is there anything else you feel why it should be a company expense?

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By Tax Dragon
15th Sep 2021 17:30

An accounting consultation.... on whether to run the business through a company, maybe?

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Replying to Tax Dragon:
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By Patrycja1233
21st Sep 2021 16:48

This cost is related to the start of the business by the client

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Replying to Patrycja1233:
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By Tax Dragon
22nd Sep 2021 12:12

Patrycja1233 wrote:

This cost is related to the start of the business by the client

Meaning?

Whatever, it's not sounding like a cost of the business. Taxwise, it sounds like a 'nothing', wherever it's charged.

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Replying to Patrycja1233:
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By Leywood
22nd Sep 2021 12:38

Pretty sure that is not what is said on the invoice

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By ireallyshouldknowthisbut
15th Sep 2021 19:50

I imagine the accountant who gave the consultation can fix this stuff.

All I would do as what I assume is either the bookkeeper or owner is to list the costs incurred for now and let the accountant make the decisions about what might or might not constitute pre-trading expenditure depending on the specific circumstances. There are an armful of "what ifs" here, not least if this is the incorporation of a sole trader business or not. As it will only happen once or twice in your business life there is no point trying to learn about this area.

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By Merseyside Mike
15th Sep 2021 19:48

Have a look at Section 61 of the Corporation Tax Act 2009 relating to Pre-trading expenses. The question is whether pre-incorporation is the same as pre-trading...

61Pre-trading expenses
(1)This section applies if a company incurs expenses for the purposes of a trade before (but not more than 7 years before) the date on which the company starts to carry on the trade (“the start date”).
(2)If, in calculating the profits of the trade—
(a)no deduction would otherwise be allowed for the expenses, but
(b)a deduction would be allowed for them if they were incurred on the start date,the expenses are treated as if they were incurred on the start date (and therefore a deduction is allowed for them).
(3)This section does not apply to any expenses in relation to which—
(a)any debit falls, or
(b)any debit would fall but for section 330 (loan relationships: debits in respect of pre-trading expenditure),to be brought into account for the purposes of Part 5 (loan relationships).

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Replying to Merseyside Mike:
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By David Ex
15th Sep 2021 20:37

Merseyside Mike wrote:

Have a look at Section 61 of the Corporation Tax Act 2009 relating to Pre-trading expenses. The question is whether pre-incorporation is the same as pre-trading...

$64,000 question. Odd that VAT recovery is allowed for pre-incorporation expenses but I struggle to read S61 as allowing the same for CT purposes.

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Replying to Merseyside Mike:
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By Bobbo
22nd Sep 2021 13:27

Merseyside Mike wrote:

(1)This section applies if a company incurs expenses for the purposes of a trade before (but not more than 7 years before) the date on which the company starts to carry on the trade (“the start date”).

While i'm sure there is a case or two out where where it has been held to be possible, generally I would consider it not possible for a company to incur an expense before it has been incorporated. This would be the key difference between 'pre-incorporation' and 'pre-trading'.

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Replying to Bobbo:
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By Patrycja1233
22nd Sep 2021 14:21

So how to approach the information on the possibility of recovering VAT from the invoice before the incorporation of the company, according to this website https://www.gov.uk/hmrc-internal-manuals/vat-input-tax/vit32000#pre-inco...?

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By Paul Crowley
15th Sep 2021 20:34

Let the accountant that was consulted decide.
He knows what he did
And he knows who he acted for

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Replying to Paul Crowley:
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By David Ex
16th Sep 2021 00:44

Paul Crowley wrote:

Let the accountant that was consulted decide.
He knows what he did
And he knows who he acted for

Couldn’t have contracted with a company that didn’t exist, could he? Surely just not possible.

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By Calculatorboy
16th Sep 2021 00:22

Get an accountant

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By Justin Bryant
16th Sep 2021 10:44

As any legal obligation can be novated (simply by conduct of the relevant parties) I don't see why not.

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By Tax Dragon
22nd Sep 2021 14:51

Who paid the supplier?

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Replying to Tax Dragon:
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By Patrycja1233
23rd Sep 2021 10:13

Director with a private account

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Replying to Patrycja1233:
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By Tax Dragon
23rd Sep 2021 11:48

Hm. New information.

Given that additional information, I wonder whether Justin would care to post back. (IANAL so am not competent to comment.)

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Replying to Patrycja1233:
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By Hugo Fair
23rd Sep 2021 13:40

How does this thread differ from the one you posted a week later - see https://www.accountingweb.co.uk/any-answers/how-to-book-invoices-before-... ?
I'm getting déjà vu ... and you're not getting different answers!

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