Director's expenses: company Vs personal card

[ctrlbrk]

I searched on here for this before posting, assuming there would be at least one topic that asks the question but I drew a blank.


Are there any obvious differences between paying a company expense with the company's bank account Vs. paying the same expense with a personal card and submitting that as a director's expenses item in the accounts?

 

[Elliot Green]

If the expense is wholly and exclusively for the Company's benefit then prima facie there is unlikely to be a material difference for corporation tax.
However, it can make record keeping a more involved affair and potentially a slightly less organised one.

The proof of the pudding is perhaps of course if there is ever a challenge by HMRC over such expenses.

When you do the annual accounts for example, isn't it easier to have most transactions under one roof and neatly flowing through the Company's bank account rather than being undertaken through multiple sources of finance? If you instruct an accountant to go through all your personal accounts and the company accounts to unpick company transactions *perhaps* your accountancy bills *might* be higher than they otherwise *could* be.

 

[Daybooks]

The obvious difference is that one is a directly paid item whereas the other is a reimbursement of expenditure. Reimbursement of expenditure should have policies and procedures in place to ensure, amongst other things, they are approved (where applicable) and any benefits in kind are identified and accounted for.

There is the general concession that VAT can be recovered by a company on expenses despite the invoice not being made out to the company seeking recovery. Without an expense policy you are open to challenges on this.

Generally the same number of prime documents but possibly fewer bank payments.

 

[ctrlbrk]

@Elliot Green just to clarify these would be 100% unobjectionable company expenses, there's no question there. I am merely trying to understand any differences (both from an accounting point of view, if any, or from a wider point of view) and so far, both you and @Pi Daybooks covered quite well my question.

Thanks both.

 

[numbersrule]

Hi ctrlbrk
I have some expenses paid by personal bank card and then I claim them back and one point to consider in the selection of business or personal card can be about ownership for the expense. For example, contractually, I personally own my mobile phone. Therefore I pay the mobile phone bill via my personal card and claim back the relevant portion of the bill through an expense claim.
So, my query would be, if as you have said the expenses are unquestionably business expenses, why would you want to consider paying for them on a personal credit card / debit card anyway?
If this is about managing business cash flow temporarily by minimising spending from the business account then it may be a significant factor when you are near to year end, if you are reimbursed by your company in a new year then theoretically the expenditure would be a Director's Loan and depending on the amount involved might influence the balance sheet possibly negating whatever you are trying to achieve. But even that might only be essentially a cosmetic factor depending on the amount involved.

 

[ctrlbrk]

why would you want to consider paying for them on a personal credit card / debit card anyway?

Hi, thanks

There are some recurring transactions (e.g. domain name renewal) which I initiated prior to forming a company and, as such, they are being charged to my personal card. So it's a simple matter of using the same card. Of course I could change it in the system if I wanted to, but if there is no difference other than keeping track of where the expense was paid, then it's no big deal using either.

The other reason could be consumer protection: if I use a business card to pay for something, I may not be afforded the same level of protection I would if I used my personal credit card (e.g. if I am paying for a trial service or something).

 

[DontAsk]

Hi, thanks
The other reason could be consumer protection: if I use a business card to pay for something, I may not be afforded the same level of protection I would if I used my personal credit card (e.g. if I am paying for a trial service or something).

Some might consider that to be fraudulent.

 

[MyAccountantOnline]

I searched on here for this before posting, assuming there would be at least one topic that asks the question but I drew a blank.


Are there any obvious differences between paying a company expense with the company's bank account Vs. paying the same expense with a personal card and submitting that as a director's expenses item in the accounts?

Have a read here -

https://www.gov.uk/expenses-benefits-credit-debit-charge-cards

 

[GLAbusiness]

If the domain name is still registered in your personal name (regardless of payment method) then it is not a company expense so I don't think you can claim this until you transfer ownership of the domain name to the company

 

[ctrlbrk]

Thanks all for the guidance.