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Pre paid debit cards tax position

Can prepaid debit cards be used to extract cash

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I have just spoken to a potential new client after reviewing her current management accounts. I picked up on a large spend on subscriptions which seemed to be excessive for a business in her sector.

When I questioned her about it she told me that she is putting money on a prepaid debit card to spend personlly as she does have enough money. This, she tells me was recomended by her current account that does the same thing. My view is this would go down as dividends and be taxable and there is no way there could be any tax loophole which thinks there is. She is admament that this is correct and what her accountant advised her to do is tax free. It all sounds like a money lauder's wet dream to me.

 I cant beleive there is any way in the world this is correct, so posting it here on the the minute off chance she is correct. Any one agree with her?

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By lionofludesch
05th May 2020 15:33

You're right. It's nonsense.

Director's loan account.

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By Wanderer
05th May 2020 15:55

rob winder wrote:

She is admament that this is correct and what her accountant advised her to do is tax free.

Brilliant wheeze, made me laugh out loud!
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By ireallyshouldknowthisbut
05th May 2020 16:06

I think there was a scam going on a few months ago where these prepaid cards *claimed* that it was tax free.

But its clearly balls

I doubt her former accountant said it was OK, and more than it is to add your daughters pocket money, music lessons and bus fares on, as we had recently. "The old accountant suggested it". Really I said. Taking it out.

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By lesley.barnes
05th May 2020 16:25

Someone posted on here a few months ago asking if we had heard of something similiar to this. It was being touted by some offshore set up and involved money being put on debit cards, the promoters were taking a % for "advertising".

I've had a search but I can't remember the name of the outfit - sure it began ironically with "P" The opinion was it won't work and if this is something similiar it still won't work.
In this case (being kind) could she have misunderstood the rules around trivial benefits?

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Replying to lesley.barnes:
By Cheshire
05th May 2020 16:44
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By wingman22
05th May 2020 17:26

As an IP I'm dealing with a fraud case where c£30m was paid out of a Company and put on numerous pre-paid cards.

This goes back several years prior to the Liquidation. The transfers out of the company bank account (c£100k at time) can have any description so a review of the statements provided by the bank will be useless.

The banks try to withhold sort codes and account numbers where the cash has actually gone without a court order. The pre paid card card companies do not reply as to who opened the account, who spent the funds, where it was spent.

Its just an scam to extract cash tax free.

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