Client is established Ltd Co, hoping to attract £10k crowd-funding for new venture. The funds are likely to arrive close to end of company year, so won't all be spent within that year. Can the balance be transferred to a reserve to be spent the following year rather than be part of Income in current year?
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Are you sure the funding is income?
What does the small print say the funders stand to gain if the new venture is successful?
HMRC isn't super clear about the whole field, but they seem pretty clear that funding through Kickstarter or Indiegogo which is a 'donation' but offers 'rewards' is treated as income. This is what my client is planning to use.
HMRC isn't super clear about the whole field, but they seem pretty clear that funding through Kickstarter or Indiegogo which is a 'donation' but offers 'rewards' is treated as income. This is what my client is planning to use.
It depends, as John has said already, on what the backers get for their money and at what point they become entitled to those rewards. Funding through Kickstarter or Indiegogo can be either a donation or sales/income or indeed possibly some other sort of payment and it depends on your clients specific terms.
So assuming it IS income, my question really is about the timing of when it is brought to account as income. Given that the funds are for a specified project but the funds are only part-expended in the year they are received, is it defensible to take up the balance of funds as a Reserve to be expended (and brought into Income) in the following year rather than taken up as income in the current year?
