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Ltd company invoicing shareholders sole trade business

Ltd company invoicing shareholders sole trade...

Customer wont deal with the Ltd Co. ( history with one of the directors who is an ex employee) (Ltd Co has 2 shareholders, 1 director, many customers)

One of the shareholders has performed the work via his sole trade business.

Sole trader has contract with customer.  Sole trader invoices customer. Customer pays sole trader.

ABC Ltd then invoices the sole trader and the income is brought into the Ltd Co.

Sole trader accounts then show sale and expense which match.

It just seems wrong doesn't it?  Do you agree? What (how much) am I missing here?




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By neileg
29th Feb 2012 10:59

'It just seems wrong doesn't it?'

Nope. Looks fine to me.

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29th Feb 2012 11:35

Hasn't this question been posted before?

It doesn't look entirely fine to me.

For what services is ABC Limited invoicing the shareholder?

For what business expense is the shareholder paying ABC Limited?

The only grounds for a charge would be where the shareholder, while dealing with the customer, has sub-contracted the work to ABC Limited, but you need to consider whether this would have been possible in practice given the customer's antipathy to the company.

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29th Feb 2012 16:53

Is this VAT evasion perhaps?

Just a thought.


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