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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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paddle steamer
By DJKL
05th May 2020 15:57

No, it is either remuneration or debits to her DLA.

However not sure I would blame existing accountants just yet, we all know clients can get confused and a client relaying advice they themselves have received can be akin to playing Chinese whispers.

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By James Green
05th May 2020 17:56

The client has not described it properly to you.

She doesn’t put the money on the card, she buys advertising and as a reward, the adverting company puts no cash redeemable credit on a card.

It’s a tax Scheme that was doing the rounds about 18 months ago which IMHO is a load a BS, but which comes with the usual QC opinion.

If I can find / remember who was offering this, I’ll post a link up here.

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Replying to James Green:
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By Cheshire
05th May 2020 19:19

Was it this post James?
https://www.accountingweb.co.uk/any-answers/anyone-recommended-propser2

The OP double posted so I popped it on the other one earlier

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ALISK
By atleastisoundknowledgable...
05th May 2020 22:57

As per James Green.

I had someone pitch this to me about 12 months ago as a scheme I could sell to my clients. Can’t remember what the co was called though ...

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