I have a client who has recently converted his status from sole trader to the limited company. At the date of the transfer his balance sheet is following
Fixed assets 10,000
Prop account 50,000
Once I transfer the same balance sheet as a going concern to ltd company, then presumably the propertier account will become director loan account and becuase its a debit balance it will be considered as overdrawn and therefore Sec 419 implication.
I thought about bringing goodwill, however it wouldn't be justifiable and will easily be questioned by HMRC because of the losses.
Please let me know if there is a way around or if there is an error in the way I am calculating the transfer.