How do we reflect Balance Sheet disclosures of shares/corresponding debtors in this newly dormant company?
Companies House records indicate that issued share capital is 'unpaid' on this new client.
Prior year accounts received from former accountants disclose shares as 'fully paid' (2013 and comparative 2012)
Business has been trading for some years but the 2 owner directors have recently paid out profits as dividends and closed the bank account. They want to keep the company dormant for the time being to preserve the name. They have no idea if shares were paid or not (e.g as typical via loan accounts). In fact we discover they are the type of people who never quite get round to responding to anything (our only clients who had to be dragged in to sign off estimated tax returns at midday on 31 January).
- If shares are paid, then strictly there are director loan balances as directors have borrowed back the funds when 'putting the company to sleep' - so s455 implications?
- If shares unpaid and not called up, I believe there isn't even a corresponding debtor?
If, say, issued shares have nominal value totalling only £100, how would you disclose in the final balance sheet of trading activity and subsequent dormant abbreviated accounts with this uncertainty? Should the directors disclose director loans and lodge £25 s455 tax with HMRC rather than put £100 cash in a bank account? Should I care?!
Replies (10)
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I think "loans" in respect of
I think "loans" in respect of unpaid shares are outside the scope of S455.
But you are saying that previous accounts show shares as paid up, so any "loan" is already in the books, so what is the problem?
There doesn't have to be cash in the bank. It might have been spent.
There doesn't have to be a debtor (on which by the way no S455 tax would be due in any event) as it might been repaid, or taken into account somewhere else.
As you already have the shares in your books I don't know what the problem is.
I fear I still do not understand what your problem is.
Does your opening TB balance and does it include share capital?
So the share capital has already been accounted for by your predecessor. So that's the end of the matter isn't it? The problem this thread was about does not exist.
Share Capital is Red Herring
As John says, the share capital has been accounted for and is no longer any problem. You need to look at the transactions "putting the company to sleep".
One of these may have the effect of distributing more dividends than there were profits in the profit and loss account, or else perhaps a loan was made to the directors by them taking cash out of the company, in excess of their credit balance on their DLA, which was not accounted for as a dividend.
Floats/petty cash
Directors/employees quite often have floats from companies. I remember doing a cash count once as a young trainee. I asked to see the £20 petty cash held by one employee. He took out his wallet showed me a £20 note and put it away again!!