Invoicing on behalf of a Client

[rgshep]

Hello UKBF users,

I'm after a bit of advice on how to organise a bookkeeping and accounting system for the following business stream.

As part of a larger contract of works I have agreed to provide a billing service for my public sector client to their service users. The client is not in a position to generate invoices for small amounts to many different customers so the task was incorporated into my company's IT-based contract.

I didn't think this would be difficult at first until I thought about raising some invoices and have become unsure about what to do with the income.

The income will be by my company, and subsequently used to "offset" the forthcoming year's main contract payment, or it may be transferred to the client, or used to fund other goods and services that we provide.

I will hold the funds in a Client account at the bank.

Where I have become stuck on the process is how to generate an Invoice to one company, keep a portion of it (costs and expenses) but then transfer the rest into the holding account, without becoming liable for Taxation on the whole amount.

Any advice on how to arrange this properly would be appreciated.

With thanks, best regards, and best wishes for success in the New Year.

Rob

 

[faradaykeynes]

Are you licensed to hold money for client? if yes your invoice to end user should say you are acting on behalf of your client, all money received should go nto client a/c and from there you can pay to your client after your portion of commission income, your correspondence documents to your public sector should say its a disbursement to avoid CT liability for your company

 

[Scalloway]

You will be taxable on the commission you charge.

 

[rgshep]

Are you licensed to hold money for client?

Dear faradaykeynes,

I am unaware of such regulations? Are you able to let me know what licensing is required?

With thanks

R

 

[faradaykeynes]

Normally regulatory bodies authorise practises to hold money on behalf of client e.g many accountancy practises , solicitors, estate agents. I think speak to FSA about it

 

[Scalloway]

This may help. The FCA have taken over from the FSA.

http://www.fca.org.uk/firms/firm-types/payment-services-institutions

 

[rgshep]

You will be taxable on the commission you charge.

Thanks Scalloway.

I understand. Quite right, this part is my incoming revenue - the rest is Client's income that I don't want to be taxed on.

This may help. The FCA have taken over from the FSA.

Thank you for this resource. It seems a bit too involved for such a small amount of money on non-core business. I have begun to think that it was quite similar to invoice factoring.

I'm not sure I want to go down any such route which involves a lot of regulatory/legislative overhead.

I will try and find an alternative means of doing business.

 

[rgshep]

In light of the probable regulatory overhead for the above proposed arrangement, I am thinking of splitting up the main contract invoices into quarterly sums, and then using the revenue from the customer billing to offset and reduce the last quarter's amount.