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.
- Income tax exemption on woodlands 48 1
- Standard P&L format - Companies Act 2006 35 2
- Disengaging a client who uses our office as a registered office address 621 15
- Tax rebate under PAYE, no p60? 59 3
- Excessive Security 575 25
- VAT Bad Debt Relief 79 2
- I know this has been done to death but IRIS / DIGITA / CCH??? 383 7
- Generic PAYE notices 217 6
- Ltd company or sole trader 243 9
- Cross Border VAT Reclaims 182 5
- Fee protection 234 8
- LLP classification of division of profit 137 4
- Changes in NHS pensions 185 1
- Free Agent data? 201 3
- Reusing dissolved company name? 158 2
- deductions for OMB companies 195 3
- Stopping trading and de-registering for VAT 179 4
- Insolvent Liquidation 117 1
- insolvency ip control 165 1
- Capital Allowances on Furnished Holiday Lets Business 145 3
- Xtuple 480
- Qtac payroll for bureau 323
- Confused - Professional Association a Mutual trader, or not? 270
- Industrial & Provident Societies 262
- Data transfer from Sage Line 50 to VT Transaction+ 203
- Mehjoo 198
- VAT on commission from Oyster card top up, lottery & paypoint 168
- New strategic report 161
- South African Government Pension 138
- Domain name sale and limited company 138