Morning.
New client.
Company A set up a few years ago. Traded with it's own bank for say a couple of years.
Company B set up to take over the trade from Company A due to industry reasons. All are VAT registered so it's not a tax dodge.
Both have same director and shareholder.
18 months later, I've come to do the accounts for Company B and noticed that all the bank statements are in Company A's name still. Company A is in the process of being struck-off. Company B has it's own bank account now (but that was only set up last week!).
So, I'm a bit lost. Do I now have to undo Company A's striking off and final corp tax return, and redo the accounts up to last week in Company A name? Or can company B be "allowed" to use company A's bank for that long? "misappropriation of company A's funds" keeps bugging me. If there is a small overlap I wouldn't be too worried, but 18 months.. (the whole of the first year of Company B plus..)
Another thing is, it's a shop, and the receipts given out don't give the company name just the "trading as" and so no customers are even aware of what the company name is other than the trading name on the door (which was not changed). So I can't even use sales invoices as an indicator of which company. And the purchase invoices are in a mixture of Company A, Company B and the trading name.
Sorry bit long winded but, do I have to re-do Company A up to date as it was Company A bank? OR can I put it through Company B?
Replies (3)
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Look like an inter company balance created
If the trade was transferred from A to B, and vat returns done in name of company B thereafter, it is pretty clear the activity belongs to company B (p.s. would be a trifle concerned re Company B vat returns as presume it has been claiming input vat on purchase invoices addressed to company A? I presume trade/stock etct was sold across as a TOGC and there is no "Group" form of vat registration?)
If the above are correct then it would appear that your client has created an inter company balance , arising from the intromissions through the company A bank account of Company B's activities.
I would advise client at this time to stop striking off re company A, then prepare accounts for both ensuring intercompany account squared. Once trading fully through new bank account (ensure credit card receipts etc now going to correct account/all d/d payments switched etc) then repay intercompany balance from A to B (presume it goes this way) and then think of winding up company A.
The client needs to be told to ASAP get his suppliers to either switch their accounts into name of company B or if they will not (some can be a real pain) open trade accounts with them in name of Company B.
As an aside, what happened re PAYE scheme, that could be another loose end?
Company A is just acting as a bank for company A (but has the classified as a debtor not a bank balance). I would get company b to buy the business of A for the inter-company balance. Debtors and creditors all transfer to B which is probably how your client has been behaving anyway. Then you can close A without a hiccup.