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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4803
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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How far back can my start-up expenses go if I want to

Resolved Question:

How far back can my start-up expenses go if I want to include them as expenses for my business? So if I have just incorporated a Ltd Co and I am applying for a business account now, the bank want to know how much investment I have already paid out for expenses. I have previously already made lots of payments for costs involved in setting up the business, as far back as January. I only started trading in September.

-How would I claim back these costs in future?

-If I deposit another lump sum for getting the business going, would this be called a Director's Loan that I can reclaim in the future once the business starts making a profit?

Submitted: 3 months ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 months ago.

Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.

Expert:  taxadvisor.uk replied 3 months ago.

Thank you for your question.

Please advise the nature of your start up costs.. these costs may be claimable through director's loan account.

Any injection of capital to support working capital would be Director's loan and you can withdraw this sum at a later date without incurring any tax on it.

Customer: replied 3 months ago.

I have paid for for logos, designers, graphic designers, advertising, online marketing courses, stationary, computers, website admin costs. The highest costs are the online marketing courses which helped me to get the business started, some were £2k and another was £7k. I paid for everything through my personal credit cards and personal bank account.

I will also need to inject capital now into the new business account when it is set up to pay for website maintenance, stock, advertising etc.

Please advise how can I claim all the costs back and if there is a time limit as to how far back the expenses can go.

Expert:  taxadvisor.uk replied 3 months ago.

Thank you for your reply.

Any espnese incurred wholly and exclusively in the course of setting up the business for which the company was later incorporated are claimable.

You should be mindful of the fact expenditure of acquiring a skill in the first place would not be allowable. If you can demostrate you already had the basic skill and this expenditure was incurred in furtherance of that skill would be claimable.

Expenses can be claimed for up to 7 years before a company starts up in business.

More information on this can be found here

http://www.companybug.com/can-i-reclaim-pre-company-formation-expenses/

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 3 months ago.

Thank you.

1. How do I reclaim expenses already paid out?

2. Is this treated differently to capital I inject into the business by way of a lump sum payment into the account?

3. How would I reclaim both the expenses and the capital injection?

4. When can I claim them back?

Expert:  taxadvisor.uk replied 3 months ago.

Thank you for your reply

You would do journal entries to record the expenses (revenue and capital) and credit director's loan account.

When cashflow allows you would pay yourself this money and clear the balance on director's loan account.

It is treated the same way as if you were to introduce caoital into the business as a loan.

You would reclaim both the expenses already incurred and any future capital injection when the company finances make it possible..i.e once you are profitable.

I hope this is helpful and answers your question.

Customer: replied 3 months ago.

Thank you.

-Is the director's loan account always there until the full amount has been reclaimed?

-Can I repay myself any amount whenever there is profit eg if I want to take £500 or £1,000 at different times whenever there is sufficient profit?

-If in the future I need to inject more capital into the business, would that just be added to the Director's loan account and reclaimed whenever I wish?

Expert:  taxadvisor.uk replied 3 months ago.

Thank you for your reply

-Is the director's loan account always there until the full amount has been reclaimed?

Yes

-Can I repay myself any amount whenever there is profit eg if I want to take £500 or £1,000 at different times whenever there is sufficient profit?

Yes

-If in the future I need to inject more capital into the business, would that just be added to the Director's loan account and reclaimed whenever I wish?

Yes

I hope this is helpful and answers your questions.

If there are no more issues, I will appreciate if you would kindly rate my service/accept the service I have provided before you leave the site, to ensure I get credited for it by Just Answer.

taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4803
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Expert:  taxadvisor.uk replied 3 months ago.

I thank you for accepting my answer.

Best wishes

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