Paying a contractor via the owner's personal bank account?

[SP3456]

Our company is sub-contracting work. The sub-contractor is an UNLIMITED company with one sole shareholder and one director, who are different people.

The company has given us their company bank account details but has since decided they want the money to be paid to the sole shareholder's personal bank account.

If the company sends us the invoice noting the sole shareholder's bank account details, I assume I just follow orders and pay it to that account? Will HMRC raise questions as to why I am paying into the personal account of someone who isn't a director in the sub-contract company?

It's just an unusual situation. If it helps, I do know the owner well and they are decent people.

 

[Mitchells Bristol]

It's just an unusual situation. If it helps, I do know the owner well and they are decent people.

It may be worth asking them why they have asked you to do this if the relationship permits such a question. I would ask for a receipt from the company confirming that the shareholder has accepted payment on its behalf so that there can be no disputes over unpaid invoices down the line

 

[SP3456]

It may be worth asking them why they have asked you to do this if the relationship permits such a question. I would ask for a receipt from the company confirming that the shareholder has accepted payment on its behalf so that there can be no disputes over unpaid invoices down the line

Thanks. Although I will ask for a receipt anyway, disputes over unpaid invoices is very unlikely to be an issue. My main concern was whether sending the money into a personal bank account of someone not a director of the company will raise any HMRC eyebrows as to whether it was a legitimate payment for services and not a gift or something. ie it is very hard to link the two parties (individual recipient and contracting company). It is quite a lot of money...£50k plus.

 

[Mitchells Bristol]

Fortunately for you, the issues will all be on their side, in terms of how they treat the money/whether they declare it. As long as you have your invoice from the company, and a receipt for payment from the company you have nothing to worry about.

If in doubt though, just pay it into the normal company account - if they then want to transfer the money to the shareholder they can pay him a dividend!

 

[SP3456]

Fortunately for you, the issues will all be on their side, in terms of how they treat the money/whether they declare it. As long as you have your invoice from the company, and a receipt for payment from the company you have nothing to worry about.

If in doubt though, just pay it into the normal company account - if they then want to transfer the money to the shareholder they can pay him a dividend!

Great. So they give me an invoice with bank details, I pay into the given details, they issue me a receipt...then it's up to them.