paid or unpaid - who knows!

paid or unpaid - who knows!

Didn't find your answer?

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)

Please login or register to join the discussion.

By johngroganjga
27th Feb 2015 08:12

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?

Thanks (0)
By JimH
27th Feb 2015 08:52

If shares are paid up ...
... there either be £100 cash in the bank or £100 DLA?

Thanks for bearing with me ...

If shares weren't paid up, there'd be no loan balance unless shares called up?

Without full ledger history, I'm tending to accept the accounts rather than Companies House picture. There's no bank balance, so there must be a loan balance. As the loan is in respect of 'paid' shares, there must be a S455 liability?

If the loan was already long ago in the books, it was more than covered by balances owing to directors, so no S455 would have been due until now.

Thanks (0)
By johngroganjga
27th Feb 2015 09:00

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.

Thanks (0)
By JimH
27th Feb 2015 12:14

Thanks, John
Many thanks, John, for your patience.

I guess my 'problem' is double entry and the tax consequences. There's nothing left on the company balance sheet, except a tiny CT refund due: there still has to be a corresponding debit on the balance sheet for the shares and transaction with directors disclosure as, bizarrely, this tiny sum is material.

Doh. Should have checked previous accountant's TB description! I see it does describe share capital as "called up share capital". How can s455 not be due; directors must have effectively borrowed back 'paid' funds?

So we must need a debtor.

Thanks (0)
By johngroganjga
27th Feb 2015 12:33

I fear I still do not understand what your problem is.

Does your opening TB balance and does it include share capital?

Thanks (0)
By JimH
28th Feb 2015 08:22

Simply

That I'd very much welcome a suggestion for an alternative balancing entry for the share capital in a balance sheet that otherwise only contains a debtor for CT with corresponding P&L balance. No fixed assets, no cash, no creditors, just a debtor for CT and presumably shares. Apologies if I hadn't made that sufficiently clear in my last response. So I believe the debit must be to DLAs, and S455 tax must now be due. It hasn't been due previously as the net DLA balances were in credit. in answer to your questions re opening TB and share capital, yes and yes. But I see no where else for the debit balance to sit. Do you?

Thanks (0)
By johngroganjga
27th Feb 2015 23:00

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.

Thanks (0)
avatar
By stanbu
28th Feb 2015 00:01

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.

Thanks (1)
avatar
By stanbu
28th Feb 2015 10:55

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!!

Thanks (0)
By JimH
02nd Mar 2015 07:44

Dormant company with petty cash
A thank you! You helped me conclude that shares were indeed paid; and Companies House was never updated.

As I wonder why a dormant company would actually need a petty cash float, final question on point of principle:

Can a dormant company balance sheet state:
Petty cash £100
Share capital £100 ?

Or is this much safer (though S455 implication):

Debtors (DLAs) £100
Share capital £100 ?

Thanks (0)