Invoicing between 2 companies I own

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JamesP_

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Jun 14, 2012
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I have 2 limited companies:

1. Was active when I was contracting / freelancing on the side, and has very little activity over the last year. I am the sole shareholder.

2. Is active daily, and is a 50/50 partnership.

A situation has risen where the work we are doing is no longer 50/50, so I'm looking for the most tax efficient way to correct the balance.

Is it possible / legal / frowned upon, for my first company, to invoice my second company for services?

Or does anyone have any better suggestions?
 

Nuno

Free Member
Oct 10, 2011
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This is such a classic way of hiding money and tax avoidance that the Government cracked down on it years ago. It is still OK but within strict rules: you really should get your accountant to advise you on this from the start.
 
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It is legal to invoice an associated company for goods or services provided, of course providing that the goods/services are legitimate. If one of your companies became insolvent and an administrator/liquidator was appointed they would investigate any such payments to ensure that a proper price was paid for these goods/services and that they were actually provided.
 
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I think its a good idea , do what the big companies do they whack invoices between there own company to move profits and all sorts. so go for it ..

you own them its your money do what you find best i say. don`t be scared by all the posts which will no doubt be coming advising that you could be put in jail for 30 years blah blah :rolleyes:
 
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I think its a good idea , do what the big companies do they whack invoices between there own company to move profits and all sorts. so go for it ..

you own them its your money do what you find best i say. don`t be scared by all the posts which will no doubt be coming advising that you could be put in jail for 30 years blah blah :rolleyes:

Provided the goods and services are actually provided and are at the same cost price as provided to third parties then sure, but if you just make them up or charge higher than cost price they will be challenged should anything go wrong for the company probably resulting in a large claim by a liquidator through the court resulting in the funds being reclaimed personally and potential bankruptcy.
 
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Provided the goods and services are actually provided and are at the same cost price as provided to third parties then sure, but if you just make them up or charge higher than cost price they will be challenged should anything go wrong for the company probably resulting in a large claim by a liquidator through the court resulting in the funds being reclaimed personally and potential bankruptcy.

challenged ?? you honestly think any liquidator does anything like that .. your way out of touch . and whos talking of liquidation ?? :|

You got to get with the program.. example

Smith Corporation Ltd has offices in London, also owns Smith Corporation GMBH in Germany .. the GMBH lends 10 million to the Ltd Company .. and decides to charge 25% interest .. Long story short . the Ltd Company has lowered profits and pays UK tax on lesser ammount .. the GMBH makes massive paper profit but in Germany . and gets the special tax rate deal they have sorted with the Government there ..If the German Government don`t play ball then then they set up Smith Corporation Zimbabwe or whatever.

And that is the real world :rolleyes: Do you honestly think the Foreign Companies with Uk factories and offices pay full tax on Uk income in the UK ?? :D
 
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Fired off an email to my accountant to ask, sounds like it will be a bit of a no go from the first few replies.

Any other suggestions readdress the balance of work to pay between 2 directors?

I wouldn't have thought that this would be something that your accountant would be too keen to advise you on in writing, as some of the advice that he might give you could potentially be considered a bit unethical - although not illegal.

Perhaps try calling him tomorrow to see if maybe you get a different answer?
 
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Surely if his hand were forced by a creditor, a liquidator would have no choice but to challenge you?

In fact, my firm even does it voluntarily! Apparently we are out of touch according to the above - Lord knows how we are still a Top 20 Firm if we are that out of touch!

I understand fully that not every liquidator will investigate properly, I have seen first hand experience of this. However, most Top 20 firms will.

In response to 'who is talking liquidation anyway?'. Nobody is, but when advising on whether to do something, it is worth taking into account all possible consequences. Should the gentleman/lady's company fall foul of a bad debt and go into liquidation and suddenly becomes insolvent as a result, then this may well be applicable.
 
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Surely if his hand were forced by a creditor, a liquidator would have no choice but to challenge you?

Ok lets follow this through right ..

Assuming a Company went bust , its assets say equal 625 quid.. do you honestly believe they are gonna pursue anything ?? wheres the money coming from ?

a creditor stands inline and has very little say in anything.. just as a creditor screams and cries is not going to make anyone work for a slight chance of getting paid..
 
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Ok lets follow this through right ..

Assuming a Company went bust , its assets say equal 625 quid.. do you honestly believe they are gonna pursue anything ?? wheres the money coming from ?

a creditor stands inline and has very little say in anything.. just as a creditor screams and cries is not going to make anyone work for a slight chance of getting paid..

If investigation could result in a potential recovery, e.g. against the director, then a top firm would investigate this. An antecedent transaction, e.g. a transaction at an undervalue, is a recoverable asset. Creating fake or over-priced invoices to an associate or associated company would be a prime example.

With all due respect you clearly don't work in this industry or your experience of liquidators are of bad ones. The only scenario in which a good IP would choose not to claim in that sort of case is if it there was little chance of recovering any funds from the director or his associate.
 
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If investigation could result in a potential recovery, e.g. against the director, then a top firm would investigate this. An antecedent transaction, e.g. a transaction at an undervalue, is a recoverable asset. Creating fake or over-priced invoices to an associate or associated company would be a prime example.

With all due respect you clearly don't work in this industry or your experience of liquidators are of bad ones. The only scenario in which a good IP would choose not to claim in that sort of case is if it there was little chance of recovering any funds from the director or his associate.

I do not work in the industry from the over paid lazy liquidation seat agreed. but i have had over 30 years and probably near on 100k just wiped away due to the joke that the law is on Ltd Companies and even having clear evidence of Directors transferring assets overnight with the example smiths trading Ltd , suddenly sprins up smiths trading 2012 Ltd etc. etc. and its a joke .. but an expensive joke and the only winners are the Liquidators who always get there money or they simply don`t take the job..

and its a fact they do NOT do anything for nothing..
 
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I do not work in the industry from the over paid lazy liquidation seat agreed. but i have had over 30 years and probably near on 100k just wiped away due to the joke that the law is on Ltd Companies and even having clear evidence of Directors transferring assets overnight with the example smiths trading Ltd , suddenly sprins up smiths trading 2012 Ltd etc. etc. and its a joke .. but an expensive joke and the only winners are the Liquidators who always get there money or they simply don`t take the job..

and its a fact they do NOT do anything for nothing..

And how much work do you do for nothing?

A respectable liquidator carries out his duties and investigations as efficiently as possible, being paid in the same way as any other professional on a time cost basis, and distributing as much as possible to the creditors.

I agree that the limited company laws are too soft. However, there is little a liquidator can do about this apart from enforce the restrictions that are available under law.

It is unfortunate that you have had a bad experience in liquidations but if a company is insolvent it means there is less money available than is owed, usually by some distance.

It is also worth noting that the 'write offs' of insolvency practitioners are massive for the same reason that the creditors' are - because there are insufficient funds to pay what is due.
 
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And how much work do you do for nothing?

A respectable liquidator carries out his duties and investigations as efficiently as possible, being paid in the same way as any other professional on a time cost basis, and distributing as much as possible to the creditors.

I agree that the limited company laws are too soft. However, there is little a liquidator can do about this apart from enforce the restrictions that are available under law.

It is unfortunate that you have had a bad experience in liquidations but if a company is insolvent it means there is less money available than is owed, usually by some distance.

It is also worth noting that the 'write offs' of insolvency practitioners are massive for the same reason that the creditors' are - because there are insufficient funds to pay what is due.

i rest my case .. exactly right ..

You know one case ohh going back some years now . i dug my heels in and spent loads got the bugger to court it was confirmed he had acted unduly blah blah .. we won the case ,, Bailiffs went in time after time oh and what a suprise everything at his home and workshops , including the flash new Range Rover , the boat and the Furniture was all owned by his brother !! yea right , but the bailifs say oh well we can`t touch it.. but heres the bill for calling.
 
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i rest my case .. exactly right ..

You know one case ohh going back some years now . i dug my heels in and spent loads got the bugger to court it was confirmed he had acted unduly blah blah .. we won the case ,, Bailiffs went in time after time oh and what a suprise everything at his home and workshops , including the flash new Range Rover , the boat and the Furniture was all owned by his brother !! yea right , but the bailifs say oh well we can`t touch it.. but heres the bill for calling.

Sorry I don't follow. I'm not sure who it is you took to court.
 
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The Owner of the business that did the overnight switch from the old company to the new ..

As frustrating as it is for creditors of the old company, a new company can purchase the business and assets of the old company even with the same directors.

Clearly there was something wrong if you won a court case in respect of whatever you claim was, but anything done by the new company is not the responsibility of the liquidator of the old company. He can only report it.

And there are bad Insolvency Practitioners, just as there are bad accountants, bad policemen, bad builders, bad solicitors and so on. But for someone who seems bitter against directors starting up again it suprises me that you tell the OP to do something that, should his company become insolvent, is precisely what you are complaining about.
 
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