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.
- When to include value of import in Box 7 61 1
- employer pension contributions - OMB company 160 2
- Accounts production software license expiry & possible alternatives 300 7
- Capital gain? 76 3
- Are clients getting more stupid? 1,245 21
- Construction Industry Allowable expenses 266 8
- Recharge for private use of a company car 346 8
- How could I be identified for VAT purposes in UK? 412 8
- vat help for catering concession 274 10
- IHT dilemma 1,153 17
- Tax return software for remote working 231 3
- CGT 331 14
- Problems with Sage 50 Payroll v21(2015) pension module 319 1
- Interest paid to non-UK company - Deduction 109 2
- Compliance check 511 13
- sole trader accountant 785 14
- Entrepreneurs Relief 400 15
- Capital Allowances and Building Improvements 604 21
- More AE! 498 11
- How to classify an asset 159 3
- Auto enrolment excuses 1,079
- Feedback on accounts production software for IFRS 777
- Add T&Cs to Sales Order in Sage 462
- Digita Hosted Software 279
- Call Centre Data Costs 251
- Are any of you agents for doctors? 223
- Credit where credit's due....... 216
- Buying goods in US and selling them to company in US 205
- Married Couples Allowance wasted? 186
- Director phone costs 149