Directors expenses

Hollysan

Good morning all,

I am working on the first set of accounts for a small ltd co; just one director, consultancy services. During the first part of the year, my client worked almost exclusively for one organization, his former employer, and billed them separately for the work done, and expenses incurred. My question is this, would any of you treat these expenses as 'other income', or would you combine into sales, and if the former, is he obliged to fill in a P11D (the company employees him on a minimal salary, well below the NI threshold, during the year in question). He didn't apply for an exemption from P11D for this year.

Any thoughts gratefully received. Thanks,

Hollysan

Newbie

If I have understood correctly, was employed then set up a limited company and invoices former employer, if so may need to look at if his duties have changed (i.e taking a commercial risk) under IR35 legislation.

Re benefits in kind have you considered P9d, director criteria below
they earn at a rate of less than £8,500 per year
• they have no 'material interest in the company
• they are a full-time working director

Tiger

In my opinion the expenses are just sales, he just recharged his expenses to the client (principally the same regardless of who they are)

The P11d question no idea sorry

RAS

I would have thought the real concern here would be any IR35 issues, especially as the company is carrying out work for the directors former employer. What has changed from being an employee to carrying out work as a director of a company?

Hollysan

Thanks everyone for your replies. As regards IR35, I feel comfortable that it would not be an issue because it was for six months work only and has not been repeated. The former employer was careful to produce a contract for the work that ensured that my client did fall within the scope of IR35, and my client has also been careful, acting on my advice.

As to the employment, P9D I think would not be an option as my client is a shareholder and does have a material interest.

However I think Tiger is right and I should simply include the 'expenses' as sales, which will answer the P11D issue. Under normal circumstances my client would have included these costs in his quote for the contract, but his client insisted on doing it this way.

Thanks again for the replies.

Hollysan