Client in a pickle........

Client in a pickle........

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New limited company client is in a mess.

1. I have been engaged to prepare annual accounts for year ended 30/04/2004 (they are a year late).

2. Sole Director has been using company bank account to pay for some personal expenses (credit card bills, opticians fees, even his son's dinner money). Estimate the total will be above £5k.

Q: Is this just a case of an overdrawn DLA, or are these items benefits in kind? Is there a more serious issue here?

3. Company has "employed" students for various duties during the year (and 2005 also) but has never registered as an employer.

Q: I am getting him to register as an employer TOMORROW. Does he need to go back to 2003/4 and submit P60's/P35's etc? Any idea on the fines for late registration?

4. There is some paperwork to substantiate some business expenditure. However in light of items 3 & 4 I have doubts as to whether the Director is maintaining proper accounting records as required under the Companies Act.

Hopefully some AWeb members have seen this sort of mess before and can offer some good advice on where to start.

Thanks in anticpation,
Neil

Neil

Replies (4)

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Judi Castille senior partner of SP Consultancy LLP Kent, company formations and tax structures
By freelance32
07th Mar 2006 08:55

In a Pickle
Sorry Tom, I was being tongue in cheek. It is up to who ever left the question to decide what he makes of my comment, and this actually required more guidence than that which could be dealt with via, just a "Comment".

I see you didnt comment on the question yourself ;)

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By tomtrainer
05th Mar 2006 17:41

Judith
Isn't "giving away trade secrets" what everyone does on this site?

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Judi Castille senior partner of SP Consultancy LLP Kent, company formations and tax structures
By freelance32
26th Feb 2006 12:02

Director on the loose!!
I am going to be cheeky here.....My speciality....I could tell you blow by blow what to do, but then that would be giving away trade secrets....if your not happy, pass this accross to another accountant - you could get your Director into hot water if you dont deal with all the areas properly.

Seriously, its too much to deal with over the email, you can call me on 07811-163421 sometime and i can take you through what you need to do.

I hope no-one else minds.

AWA LLP
Partner

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By User deleted
24th Feb 2006 18:03

Nastier than pickle
I think the strict position is that items like this represent net salary and the Revenue will calculate PAYE on it given the chance. If there is a loan in place i.e. there is a loan account and a current account (which would have a credit balance on it) then the director can charge expenses against that balance.

If anyone knows this to be wrong, I would love to hear as I do this with a client who habitually can't stop himself from paying personal expenses from the company account but we have enough history that we can predict his spend over a few months and set up a loan in advance. The BiK calc and s419 tax is then fairly straightforward.

As far as not registering as an employer goes, the penalties will be the late filing penalties for the P35 - i.e. £100 per month overdue. If they were genuinely students who could have given a P38S then the need to set up a scheme might be avoided. Except of course they won't have signed P38S's.

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