What am I missing here?

What am I missing here?

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Trying to keep things as brief as possible, I've just taken a client from an unqual (who actually masqueraded as fca, but that's another story).

Husband & Wife Limited Company- both are directors and wife is secretary.  So far so good- ish.

My main concern is the shares issued- Company now 3 years old and the original mem & arts just say " £1 ordinary shares".  Husband subscribed one share.

But the last two Annual Returns and Accounts clearly show one "A" ord for husband and one "B" ord for wife. "B" ord does not participate in any dividends.

There's no sign of anything anywhere about the changes in the classes of shares and I'm now beginning to think my predecessor just dreamed it up probably when Arctic Systems was grabbing headlines. 

The client has no paperwork at all, and no recollection of anything just says "the Accountant dealt with all that"......  

The former accountant left a trail of utter devastation and errors in his wake. I've been so busy rectifying everything else I'm now in brainfade. Former accountant has not replied to any correspondence from me.

What am I missing here?  Or have Companies House also missed these "new" shares?

And if this is dreamwork, my question is..... How does it get rectified?

Replies (9)

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By Sarah P
20th Mar 2012 19:38

Have any SH01 / 88(2) forms been filed at Companies House? I'm assuming not from your post.

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Replying to Tornado:
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By WallyGandy
20th Mar 2012 21:04

SH01/88(2)

 

Thanks for that, Sarah- you are right. No sign at Companies House. It looks like the former accountant just made it all up.

This is so typical of the former "accountant", but I still need rectification ideas just to put things back to rights

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By Sarah P
20th Mar 2012 22:02

What do you want to achieve?
Do you want to keep the B shares? If not, I think I would simply file an amended Annual Return and restate the comparatives in next year's accounts. Someone might say I'm over-simplifying it though!

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Euan's picture
By Euan MacLennan
21st Mar 2012 10:59

What do the Articles say?

If the client doesn't have a copy, you can order them for £1 from Companies House.  If the Articles make no mention of A & B shares and mention only one class of ordinary shares, the company does not have two classes of shares and nothing in previous Annual Returns or accounts can over-ride that.  You just have ordinary shares.

As Sarah says, you can just re-state them as 2 ordinary shares on the next Annual Return and accounts.  If you want to get it straight at Companies House before the next anniversary of incorporation comes up, you can file an early Annual Return now (you cannot amend a previously filed return) which will become your due date for annual returns in future.  If the wife is not to be paid a dividend, despite it often being a useful tax saving, you will have to put a proper waiver in place before the next dividend is declared or amend the Articles to allow for A & B shares ranking pari passu except that different dividends may be declared.

 

 

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Replying to tom123:
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By WallyGandy
21st Mar 2012 14:08

 

 

Many thanks to both Sarah and Euan- I confirm the Arts just mention "£1 ordinary" and I agree with the diagnosis and way forward  

I'm sure this former "accountant" set this up without even telling the client- Arctic Systems panic button I guess.The Company is due an Annual Return in a few weeks, so I'll help them amend then.  

And I'm right with you. Euan- the wife should have dividends.  I've not yet seen Husband's SA but I bet it's way too big- the former accountant cheerfully advised a husband salary of £35,000.  And there's more doubtful issues.  Many more.

So I think I may just reduce that salary from April 6 2012!!

Former Accountant?  "Chartered Accountant" and "fca" all over the stationery, and ICAEW logo (the old one) on the letterhead. ICAEW have no record of him....

 

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7om
By Tom 7000
27th Mar 2012 11:20

shares

I thought there was only one share issued not two. If theres only one then it belongs to the husband and he gets all the dividends and he has his tax returns wrong and hes in a pickle and you have to charge him lots of fees to sort it out...

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Replying to gazza5:
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By WallyGandy
27th Mar 2012 14:21

It should be right.

 

Thanks, Tom- it's great to share thoughts. The former accountant seems to have invented the wifes share, but no dividend participation.  So it follows that as all dividends are to husband his SA Returns should be right.  At least I hope so- I've not looked at those yet......

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By The Black Knight
27th Mar 2012 11:39

Artic Systems ?

I think you may be giving said non accountant more credit than is due.

I would say he probably had absolutely no idea what he was doing.

Probably copied another set of accounts in 4 minutes flat and raised an invoice.

Have you complained to the ICAEW if he has been using the chartered badge I am sure they would take issue.or try trading standards. Is using FCA when you are not fraud ? POCA ? SOCA?

Your client ought to make a complaint too !

From experience you will be unraveling things for years ! Good luck make sure you charge the right fee as your good work will be forgotten when the tax bill arrives.

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Replying to Justin Bryant:
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By WallyGandy
27th Mar 2012 14:31

I'd like his head on a platter

 

You're so right!  He has no idea at all- and that's only the half of it.  But first job is to rectify a trail of mess without upsetting the client.  Client is aware of errors, but has only been operating for 3 years and there's no point in stressing him. Nothing in it for me!  

Yes, ICAEW are interested, but the former accountant still issues letters using an office address he quit 8 months ago and nobody knows where he is. With only a mobile number and an email address (hotmail) he's gone to ground and there's not much anyone can do.

Nevertheless ICAEW will be informed. But first we wait to see if he completes the 2011/12 P35.  Client has already paid him for this. He's a decent chap- just naive and gullible. Client found him through Yellow Pages and is knows of no other victim clients.  Shame, that- I could have mopped up!!

Action against this rascal? Softly softly......

 

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