I am trying to get to grips with a very messy new client situation where alot of the opening balances appear to have not moved for many years. Limited company just one Director.
Specifically there is a significant debtor who went bust in 2003 and another quite large debtor who went bust in 2012. Both were still sitting in the accounts at 31/12/13. These both need to be written off but is it best to spread the write off over 2 years (writing just one off will create a loss for the year)
A more complicated item is a total creditors balance of 40,000 in the previous Accounts which is made up in the creditors listing of a creditor of 70,000 (an amount going back 10 years which is owed to a sole trader company which the Director used to operate) but this is contra'd in the detailed listing by a debit of 30,000 being shown as owed by the same Director to the Limited company. As the credit of 70,000 is effectively owed to the Director from his sole trader business and the 30,000 is owed by the same Director would it be in order to net the 2 off and say there is a credit balance owed to the Director of 40,000 which he should be free to take out?
There are also minor issues with very old VAT and PAYE credit balances but these are smaller and it may be easier just to write these balances back into profit.
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I've got a kind of similar job with terrible sage accounts and missing records brought forward. We can only work with what we have :) and inevitably assumptions will have to be made. Just need always bear in mind how HMRC would view these 'assumptions'. If it is in their favour they tend to not care as long as the current state of affairs is good.
Yes write off the old bad debts (heeding Peter's point above).
Yes net the two director balances off.
Netting off
Thanks for the feedback. I feel a little more relaxed about it now!
John .. I was a bit concerned that the creditor in the books to the Directors old sole trader business of 70,000 might be viewed as a separate issue to the debit balance in the books which suggested the Director owed the Company money (30,000). If they were viewed separately I thought the debit might create S455 Directors Loan issues.
Is the netting off OK because a sole trader is viewed in law as one and the same as the person trading (if that makes sense)
Yes netting off is OK precisely because the debtor and creditor are the same person.
previous accountant ?
or previous bookkeeper ?
These are the questions that are killing A Web.
Why?
or previous bookkeeper ?
These are the questions that are killing A Web.
Why are these questions killing A Web? Surely not everyone has dealt with every possible situation or not on a regular basis and wants advice or reassurance. If everyone is expected to know erverything what would be the point of having a forum. There would be nothing to discuss?
I assume penfold is referring to the number of basic bookkeeping questions. Stuff like this: https://www.accountingweb.co.uk/anyanswers/question/should-i-keep-accumu...
There was also a recent thread where someone (intending to be helpful admittedly) offered advice but preceded it with "I'm not an accountant but"
Depends on your outlook I guess. 'Accounting' covers all sorts from basic bookkeeping to complicated tax planning so I don't think anyone can say that questions like this shouldn't be here - however id have thought there were other (more appropriate) forums for basic bookkeeping queries. An abundance of them here will discourage the more technically able posters whom some of us enjoy a chat/debate with or who can form a useful sounding board frm time to time.
Admission
There was also a recent thread where someone (intending to be helpful admittedly) offered advice but preceded it with "I'm not an accountant but"
At least by their own admission it gave the OP a heads up to the quality (or lack of) of the comment.
In a forum full of personas we often can't guarantee anyone's credibility.
Ledger vs Accounts
has the ledger you are looking at been actually reconciled to the FINAL accounts
adjustment/reconciliations entries, final accounting and tax entries made, by the accountant over the years, may not have been passed back to the bookeeper to input, or just not input, into the prior closed year ?
review and be careful about writing off current ledger items until certain
Of course he has - we all learn on the job.
Unfortunately accountancy seems to be n area where people (particularly in, but not limited to, th bookkeeping sector) think they can do a course, and then jump straight into self employment. Some of those people do a good job, but the vast majority are crap. Unfortunately, Pitman an others constantly churn these people out, and we now have to compete on price despite the fact that the quality is often incomparable.
I maintain that a couple of years in practice BEFORE setting out on your on is virtually essential if you want to build a good working knowledge.