Transfering bank balnces between old and new co.

Transfering bank balnces between old and new co.

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Hi All,

I have just picked up a new client. A few months ago (under his previous accountant) he closed his old limited company and set up  new limited company.   At the point of closure he moved the existing Ltd Co. name to the new company.  I am well aware of the ethics of closing one entity and then reopening another co. in the same name, so lets please avoid this discussion.  The issue for me is the bank account. He did not close the 'old' companies bank account and has continued to use the same bank account for new co.  There was a positive balance at the point the new co. was registered. Can you let me know how this should be treated in the new companies books. Also he has continued to use the same VAT number for both legal entities. - are there any implications associated with this?

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By Tim Vane
10th Feb 2016 09:22

You must treat the use of money in the old company's bank account as theft, since that money belongs to the crown. You must file an SAR, and you must not accept any money from the client because they would presumably be paying with stolen funds. My recommendation would be that you do not involve yourself in any bookkeeping that involves the transfer of any monies from the old bank account, as any recorded transaction would be false accounting.

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By JimFerd
10th Feb 2016 09:54

If the bank were properly informed, they would have frozen the account at the date it was wound up - and like Tim says, the cash belonging to the crown.

All assets/liabilities should have been sorted prior to the company being wound up. I expect that the director would have signed something to state that this has happened.

Although it does sound a bit fishy - my first thought was that the director has done it to avoid a big liability in the first company, but he seems to have transferred the VAT number over, so that's at least one tax he wasn't trying to avoid!

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By bernard michael
10th Feb 2016 09:58

It's not clear how/why the old company "closed".Can you clarify?

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Replying to Paul Crowley:
RLI
By lionofludesch
10th Feb 2016 12:04

And ...

bernard michael wrote:

It's not clear how/why the old company "closed".Can you clarify?

And is it still on the register or has it just ceased trading ?

Not enough information on the circumstances here and, consequently, a lot of assumptions going on.  We don't know that this money belongs to Her Maj just yet ...... the fact that he's using the same VAT number suggests that this may not be so much fraud as gormlessness.

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By johngroganjga
10th Feb 2016 11:37

Tim's analysis is technically faultless, but in my opinion perhaps not very practical.

All depends in my opinion on the reasons why the old company was closed (in particular whether it was part of an attempt to frustrate the claims of any creditors) and on what the bank's understanding of the ownership of the money in the account in question is.

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By cheekychappy
10th Feb 2016 12:08

You tell us not to mention the ethical side to this scenario. However, this a forum and we are free to discuss what we want.

I’m not sure why a company would want to start again but take on the VAT number of the old limited company. Is your client doing this merely to [***] on their suppliers?

If your client wants to close a company, they should do it properly. If the client wants to open a company, they should do it properly. Cherry picking assets and liabilities for the new company to inherit is just going to cause a lot of trouble at some point.

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RLI
By lionofludesch
10th Feb 2016 12:12

Whoa

I see where you're coming from, cheeky, but the fact that the bank haven't frozen the account suggests that we may be interpreting the expression "closed down" rather differently to the OP.

In my experience, banks are avid readers of the London Gazette (assuming the company is registered in Englandanwales).

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By JimFerd
10th Feb 2016 12:14

I guess if ethics and such like are ignored, then the answer is easy:

DR Bank CR DLA - Job done !

For the avoidance of doubt - This is in jest.

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By bernard michael
10th Feb 2016 15:34

Gentlemen The OP has still not confirmed how/why the company closed down. A lot of assumptions/advice are being made on insolvency being the reason. It may not be correct and onlyn the OP can tell us

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By cheekychappy
10th Feb 2016 15:38

@Bernard

It is known as the "Accounting Web [***] Vacuum".

It is a [***] question with no information, where the OP is reluctant to garnish us with a sufficient amount of information. If the initial answers are not to their liking, they rarely return to give further information.

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RLI
By lionofludesch
11th Feb 2016 12:54

8

Morebeans has only ever made 8 posts.  All starting threads, never responded to any replies.

Don't hold your breath.

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