Using dormant company illegally?

Using dormant company illegally?

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The Director has asked me to prepare accounts for a Company that has been dormant since 2001. Having gone through the bank statements I asked the Director for the back up paperwork for the sales and purchases. I was also concerned with a number of payments which he says were for employees and had already pointed out that he does not appear to have a PAYE scheme set up and needs to account for PAYE/NICs.

He has now given me some of the purchase invoices and some are made out to a Company which I have discovered was in liquidation at the time. Having confronted him with this he has come clean and said that he wanted to carry on the contract (he's a builder) and therefore had to pay his employees and creditors. I also suspect that (having not been given many sales invoices) some of the receipts relate to sales that were originally via the other company.

I am not entirely sure how to deal with this now. I have not yet told him that I can't do the accounts - what is my best course of action?
Deborah Griffin

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David Winch
By David Winch
02nd Oct 2008 10:17

Insolvency Practitioner

I would tell the client to get advice from an insolvency practitioner. In the meantime I would suspend work for this client, until the situation is sorted out.

If, as you indicate, monies due to the old company have been banked in the new one then that is not acceptable. Those monies belong to the insolvent company (and its creditors).

You need to carefully consider whether you suspect the client has been dishonest here.

If you suspect that he has (that is that he realised that it would not be right to pay the monies into the new company, but did it anyway) then a report to SOCA under Money Laundering Reguulations 2007 and s330 Proceeds of Crime Act 2002 is required.

David

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