I have a client who I took on about a year ago. This client uses the company bank account to pay for, it seems, most of their personal expenditure, we are talking c£3k - £4k per month for food shopping, clothes shopping, meals out (which they openly state are NOT for business - I don't think they are trying to hide anything) holidays, car repairs, all personal fuel for both her and her husband (no mileage logs kept) the list goes on. Accounting/tax treatment wise I believe the only real solution is to post it all to the DLA and clear via a dividend. At the end of last year however there were not enough reserves for a large enough dividend and so a significant amount of tax was paid under s455. I am hoping that the reserves will be sufficient to support a larger dividned at the end of next year to clear some of the balance down. I came to the client after the last year end, no previous bookkeeping work done, and had a job to pull together the accounts from the limited records available. The client also seems to be incapbale of keeping receipts despite me explaining the need for this (not that its not obvious!) many many times. To be honest it's likely that some of the expenditure taken to the DLA may well be for business but in the absense of any receipt or definite answer I see there is little choice but to treat expenditure as personal. The company is small, but not tiny (turnover in the £100k's per year).
My question is not really surrounding the accounting treatment as I am comfortable that this is the correct course of action. My frustration lies is that I have told the client so many times that this is not appropriate, but the advice seems to fall on deaf ears. Does anyone have any advice? A way of explaining the situation which might lead to a behavioural change? Any sucess stories? Or should I 'break up' with the client and move on? Or am I overthinking things?? Any sucess stories or words of wisdom would be gratefully received as I am nearing the end of my tether!!