Splitting UK and EU revenues from our UK business bank account to our EU business account!?

[Phil.]

Howdy, is it ok to split revenues from one biz account to another?

We're in the midst of expanding from our UK footprint into Europe and due to various e-commerce limitations it's likely we'll have to duplicate our current UK website and create a separate EU site. We can connect our EU bank account to this new site. I.e, all sales flow into correct bank account, UK and EU.

But... if we wanted to continue with our current e-commerce store (much easier) EU sales and payments would still be paid into our UK biz bank. Would it be possible to manually transfer these sales to our EU bank account without making accounting a nightmare? I'm concerned mr tax man will look on this as bad practice?

Any thoughts?

Thanks,

Phil

 

[Scalloway]

Would you be transferring each individual transaction or just doing a total each day?

 

[Phil.]

Can do either, is there a difference?

 

[bobbo mcbobbo]

I'm not an accountant so probably shouldn't be replying, but why would it matter which bank account the payments go to? We sell in Europe and payments go to whichever account is more convenient.

 

[Phil.]

Don't worry, I'll double check with our accountants. I just like to sound out ideas like this here as it can be really helpful.

If payments all go to our UK account, i.e all transactions take place through our UK site and we then start transferring money to an EU account it could like we're trying to minimise profits and pay less tax. I don't want the tax man questioning us.

Theres also a compliance side, if the sale takes place through a UK website I would have thought that the money would have to be classed as UK revenue.

 

[bobbo mcbobbo]

The company pays tax on its worldwide profits regardless of which bank account the money went into. Your bookkeeping will include transactions from both bank accounts anyway so it doesn't make any difference.

 

[Phil.]

Thanks Bobbo. It's likely we'd set up the new EU company as a new company (could be a subsidiary of parent UK company maybe).

If it's a new company then profits would be liable for each individual company and then my question remains about the website and the one bank account. It's not an ideal scenario and would be much cleaner if if we just had two separate companies, two separate bank accounts and two separate websites. It's easy for us to set up two separate companies and bank accounts. But a duplicate website is going to be a right pain!

 

[bobbo mcbobbo]

Oh, in that case ignore what I'm saying - I don't know how it would work with 2 companies. I'm sure you have your reasons, but out of interest why are you setting up a separate EU entity? That sounds like an administrative and financial nightmare.

 

[Phil.]

Two reasons, we've taken a hit on margins as we now sell to EU as a third country post brexit. I.e, EU customers purchase goods from our website at the same price as UK customers but we don't charge them VAT. So we keep the 20%. But we then get hit with prevailing EU Vat rates (avg about 23%) and duty so we take a lower margin.

Secondly, as we retail jewellery a lot of countries will not accept UK hallmarked goods so we've had to stop selling to several countries, if we send it direct from the EU (and new EU company) they aren't bothered about hallmarking.

Theres more reasons, but they are the main two.

If we could find a fix to have duel checkouts on to the UK and one to the EU that would really fix things. sales/Revs drop into the correct corresponding bank and no need for second website.