How to handle customers money?

[chris2014]

Hi everyone, new to the forum, be gentle!

My new website will need to hold money for customers (escrow?) until the transactions are complete, typical value will be between £5 and £5000.

What I have been thinking of is how do we go about taking the money from the customer hold onto it without being taxed on it by HMRC?

Are we able to open a special account with the bank and say any money going into this account is our customers and not ours, don't tax us on this HMRC?

Would we need to be FSA registered?

Could really do with some help on this, a pointer in the right direction would be great!

 

[StevensOnln1]

You need a Client Account which you hold client's funds in and will be treated as separate to the company's own funds by your bank. Client funds only appear on the balance sheet in your accounts not the profit and loss so you would not be taxed on them anyway (what money you have in which bank account has no effect on how you are taxed).

If you are going to be holding funds on behalf of others then you will probably need to register with HMRC under the Anti Money Laundering Regulations.

 

[kevin.doran]

...and be warned there's a strong chance you'll have to jump through plenty of hoops with your bank.

 

[chris2014]

Hi, thank you both for your reply, is there any easier way around this? another way of being the middle man to the funds?

 

[chris2014]

I wonder if holding the funds in a gateway would solve this, the money will literally only be with us for up to 1 day max.

 

[chris2014]

I wonder if the best option would be take the money, then allow the seller to request a BACs once their account reached a limit and pay it out that way, like the affiliate companies do I guess.