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Accounting mess

Small Ltd co - no VAT

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I have a client who sells vaping liquids and equipment. The accounts are a mess. There are no till rolls from the shop, simply a spreadsheet of cash and card receipts that does not agree to the bank receipts or the credit card reports.

Client says shop staff were rubbish and made mistakes with the spreadsheet.  Thankfully its below the VAT threshold.

I think the only answer is to record sales based on receipts in the bank.  I dont feel entirely comfortable with this as if the shop staff were so incompetent, then its probable that cash was taken by staff and/or used for cash purchases from suppliers.

We are msising lots of purchase invoices as well - clients computer died during the year with no back up. We are in the process of requesting copy invoices fron suppliers where available but lots are not available so again, Im left with using the bank statements.

What would you do if faced with such rubbish accounts?  I have them now on Xero so going forward should be less of an issue.  What would HMRC think if they opened an enquiry?










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15th Mar 2019 14:12

Shops have tills, it's hardly the staff's fault that your client has some idiotic idea of a better way of recording sales that has, surprise surprise, turned out not to be better than the method everyone else uses.

Ultimately, if your client is adamant they can't produce any records at all for a whole variety of reasons, you can only record what you do have based on factual records like the bank statements, then look at what that means they've earned in the year.

Look at the owner's lifestyle and see if the money earned is enough to support that, if not, bump the sales up until it is with the balance going against DLA since if they refuse to keep proper records then I'm quite sure they also take money out of the company willy nilly.

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15th Mar 2019 14:19

I would document a proposed approach and get client to agree prior to work commencing. And fee paid upfront.

You would need to be pretty sure he was genuinely changing his ways to want to continue to act.

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15th Mar 2019 14:28

At least you have the bank statements. That should, at least, reduce the worry about the lack of purchase invoices. Unlikely they would pay suppliers they didn't owe . . . ?

I would do a perfect set of accounts from the bank statements and then bolt on all the stuff that hasn't hit the bank. This crappy spreadsheet might be useful there. I don't know, I haven't seen it.

Ultimately, that becomes the best job you can do under the circumstances. Warn the client that they will be vulnerable to an enquiry because of the absence of documents and controls, which could cost them.

Tell them it is the sort of mess they would expect of a money launderer and that you will need to see improvements for next year to show they are a serious trader. You can help them with that (at a suitable cost, of course).

Their response will inform you if you wish to be associated with them. If they are half-hearted, let them be someone else's problem in future.

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