Removing non-existent debtors
We've taken on a client who switched accountants to us as they weren't getting a decent level of service; it's been over 3 months but we've finally just about got the professional clearance documents.
The accounts are showing debtors of ~£3000. We've been through the last two years, and there are no debtors, so we're convinced that it's not right. We've reconstructed the sales ledger and have proved the turnover figures are correct for the last accounts completed. It's not obvious what else could be wrong to get the debtors wrong. It's a very simple one-man-service-business limited company and there were definitely no debtors. No accrued income. The previous accountant says the debtors are sales invoices, but all invoices were clearly paid into the bank in the year, so there are no trade debtors.
They're on flat rate VAT so we have taken that into account as well, and that doesn't explain it either. The bank is reconciled.
We are stumped. The previous accounts balance, but they are wrong. All the other figures on the balance sheet and P&L look reasonable, nothing else leaps out as to where the other side of the error could be. I don't expect the previous accountant to either assist further or re-do them.
The correct answer is of course to get us to re-do the last accounts but of course the client may not wish to pay us to re-do them when they've already paid someone else to do them, and been fined £375 for late filing of the accounts through no fault of their own (and are unlikely to get their money back or make a complaint; for reasons I don't want to go into please take my word on this).
If the previous set of accounts are not re-done, from a taxation persepctive it will be the client out of pocket not HMRC, so there is no tax evasion/ MLR issue here.
My question is this: If the client won't get the previous accounts re-done, where would you put the debit to get rid of the debtors? The only solution I can think of is bad debts, and add back on the tax comp, but this will exacerbate an overdrawn directors loan account (due to reduction in reserves and thus dividends). Or carry the figure forward? Definitely not correct.
- Signed accounts for a lender 217 10
- Goodie bag 2,329 68
- Practising options 434 6
- Self-employed or Ltd Company or seek employment 389 10
- Footballers Testimonials Taxable? 467 5
- Clients have been told I'm working from home 222 7
- FreeAgent question 256 7
- Software recommendations? 371 5
- can I approach clients ? 648 10
- Latest scam e-mails 129 1
- BrightPay 939 27
- Budget 2015 predictions 599 14
- Regular Director bonus 189 3
- Have the new quarterly employer returns been finalised and where do you get them? 196 1
- accounting in estate agents 87 1
- Network marketing client - how does it work? 360 7
- Corporation Tax Software 229 5
- AAT or ATT 398 6
- Retrospectively change VAT scheme? 280 5
- Accts software 301 3
- Possible Partnership? 667
- Tax and accounting treatment on long lease granted from freehold 528
- New Fangled Penalties 460
- Fuming! 438
- Purchase of property freehold - capitalisation of costs 327
- Charity dissolution and newly merged charity 266
- Outsource Data Entry 247
- Moving away from CCH software 244
- Lenovo – Superfish & Komodia – is your PC vulnerable 241
- Do I need a US Tax Identification Number to complete W-8BEN-E? 190