Director Personal Bank Account in company's books

Director Personal Bank Account in company's books

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Hi

A new client running a company approached for his first year accounts but he did not open company's bank account and trading through his personal bank account.

How can we show his personal bank account in company's books of accounts and is there any tax implications?

Thanks in advance

Regards

Replies (9)

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By johngroganjga
24th Nov 2014 16:12

If you have the energy to read that thread good luck to you.

The simple answer is of course no you can't show the director's bank balance on the company's balance sheet as if it belonged to the company.

You put the company's receipts and payments in the personal bank account through the DLA.  If there are more receipts than payments the DLA will be overdrawn (if there is nothing else in it of course) and there will be tax issues to deal with.

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By andy.partridge
24th Nov 2014 16:10

Not again

Ditto John, except to replace his typo in sentence 2. Replace the first 'it' with 'if'.

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Replying to Newb121:
By johngroganjga
24th Nov 2014 16:13

Typo

andy.partridge wrote:

Ditto John, except to replace his typo in sentence 2. Replace the first 'it' with 'if'.

Agreed.  Typo corrected now.

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By tonyh
24th Nov 2014 18:27

Cooperative bank

When the above bank was facing financial problems the directors of one of my ltd co clients transferred a large single lump sum into Barclays. The account is in their personal names. They did this to protect the company's assets. I am hoping that  HMRC will agree.

 

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Replying to WhichTyler:
By petersaxton
25th Nov 2014 07:39

Why?

tonyh wrote:

When the above bank was facing financial problems the directors of one of my ltd co clients transferred a large single lump sum into Barclays. The account is in their personal names. They did this to protect the company's assets. I am hoping that  HMRC will agree.

Why didn't they transfer it into a company bank account which could have been set up a few weeks time?

The company could have charged an appropriate rate of interest on the loan in the time the money was in a personal account.

There doesn't seem to be any reason for keeping the money in a personal bank account for an extended period of time.

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Replying to WhichTyler:
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By andy.partridge
26th Nov 2014 17:46

And . . . . um . . .

tonyh wrote:

When the above bank was facing financial problems the directors of one of my ltd co clients transferred a large single lump sum into Barclays. The account is in their personal names. They did this to protect the company's assets. I am hoping that  HMRC will agree.

 

They left it in a personal account for how long?
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By tonyh
26th Nov 2014 17:28

Peter

Thank you Peter. I only became aware of situation when I came to prepare year end accounts.

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By tonyh
27th Nov 2014 18:21

andy.partridge

Please don't ask .................

June 2013 and was still there when I started preparing accounts August 2014.

I am assured it has been transferred back into ltd co but still waiting evidence.

I am going to have a meeting next week and spell out tax implications.

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