Our company has extra US dollars. Investing abroad gives better returns, but the bank requires a personal account. Can I invest the company’s money in my name and transfer it back later? How do I avoid tax issues with HMRC?

Investing your company’s extra US dollars abroad through your personal account might seem like a good way to earn better returns, but it can lead to some tricky tax problems with HMRC (the UK’s tax authority). Here’s what you need to know:

The Risks:

• HMRC might think you’re taking a loan from the company or that the company is giving you money. This could mean extra taxes for you if you pay it back slowly, and your company could also face a tax charge.
• Even if you make an agreement saying the money still belongs to the company, putting it in your personal account raises questions about who really owns it. This can cause tax headaches and legal issues.

A Possible Solution:

• You could set up a special legal arrangement called a “nominee agreement” or “bare trust.” This arrangement would allow you to hold the money in your name, but the company would still own it.
• The company would pay taxes on any interest the money earns.
• You need clear documents showing that you’re just holding the money for the company and that the company is the real owner.
• It’s crucial to tell HMRC about this arrangement and have a written agreement explaining it.

Other Options:

• See if the foreign bank will let your company open a business account for the investment.
• Talk to a financial advisor about other ways your company can invest the money directly without using your personal account.
• Consider just keeping the extra dollars in your company’s current accounts if investing abroad is too complicated.

The Bottom Line: Investing company money through your personal account is tricky territory. It’s always best to talk to an accountant or tax professional before making a decision. They can help you weigh the risks and benefits, find the best option for your company, and make sure you’re following all the UK’s tax rules.