Limited company but personal bank account

[bonnielochs]

Hi, hoping I can get some advice, please.

I am an Accounts Admin for a small business. The company I work for has hired a self employed contractor (Limited company). He has advised that there has been a delay in his business account being set up due to a backlog at Barclays (unsure if true) and therefore he may need his first payment actioned to a personal bank account.

Google has indicated that a Limited company is legally obligated to have a business account but I'm unsure of any consequences to us, the payee, if we pay to a personal account.

Also unsure if there is any potential issue in him claiming to be a Limited company but doesn't have the business account. How can he have one without the other?

If the contract is with the limited company then needs to be paid to the limited company bank account. Separate legal entity with different tax repercussions so I would withhold pay until it's set up.

Thanks. Yes, contract is specifically to the company with company number referenced etc.

I'm unsure if he is VAT registered but I do realise that in order for him to claim VAT he needs to provide his registration number - which I will then check before actioning any payment.
I can't forsee him being at the VAT threshold if he doesn't have a business bank account, though!

You can check whether he has a limited company / is the director / what the status of that company is on Companies
House website, it's free and you can search by name, company name, address or company number iirc.

I have two limited companies and one sole trader business and the ltd definitely have to have business bank accounts - money is payable to and from the business names, not me personally. Sole trader is ok with a personal account but I couldn't accept money for either of the others via a personal account. I suspect our suppliers wouldn't care who paid them provided they got paid but would be confusing for account keeping.

Not to be rude but are you qualified….they are paying you to know this, not ask on mumsnets

Has he given you his number etc OP? I would check his name and address match what is held on companies House too, although you've probably already done that.

Sometimes it is a case of they don't bother chasing and so hang about getting things sorted, then need to push the bank when they're awaiting payment.

I'm not an accountant, I'm accounts admin. Entirely different things.

Might be worth contacting the tax office, I've always them them very helpful and good at explains things in layman's terms.

www.gov.uk/government/organisations/hm-revenue-customs/contact/income-tax-enquiries-for-individuals-pensioners-and-employees

@Preraph Thanks. I googled HMRC and took a note of the number to call tomorrow. I've also just remembered that we pay an HR specialist company for this exact kind of query so have rattled off an email to them! I'm sure they'll give me a firm answer on things.

It took a week max to open a business account recently (not Barclays though). From his point of view, I would be worried of IR35 rules. HMRC might think he is paid into a personal account like an employee and therefore liable for NI, and making you liable for employer NI, sick pay etc. Plus the hassle to reconcile the accounts later on. Not worth it imo (if it is even legal). Hopefully he’s not trying to dodge corporation tax.

We had to use a personal account briefly when HSBC closed our business account without warning. Our accountant was happy provided we used a dormant account and could trace the money coming in and going out to the business costs. We provided that statement to him in case of queries from HMRC etc.

He has advised that there has been a delay in his business account being set up due to a backlog at Barclays (unsure if true) and therefore he may need his first payment actioned to a personal bank account.
"He may need"? Pah. It's not your problem.

Somebody needs to update your DueDil / money laundering / onboarding procedures.

There is definite misinformation on here...

It is nothing to do with you where a payment is made - all the obligation is on him, he can either transfer the money later, or indeed spend it out of his personal account, it would simply go down against his director loan account. if I were him and you threatened to withhold payment I would simply not carry out work for you...

Also - for VAT - nothing to do with you whether or not he is registered, he can reclaim VAT if he is without your knowing - the only reason for knowing is if you offset it at source, but if he is billing you then that doesn't apply (only if you are billing him!) If he is VAT registered then his invoice to you will come with the vat number on it and the invoice split down to show the VAT, if he is not, then it won't - but other than that you don't need to be specifically checking his vat status

I would not pay a Ltd Co. that was using a personal bank account - your bank may well flag this up as a personal account when you try to pay it (I had this once with a supplier I paid) - he needs to wait until his bank account is set up.