I have aquired a new client who has a negative balance sheet but has paid dividends during the year. The only liabilities of the company are the corporation tax liability and an accrual for my fees, both of which will be paid from the current revenue, the same situation had occured in the previous accounts prepared by the former accountant. Can the dividends remain as when they were drawn neither of the liabilities existed and so the balance sheet would not have been neagtive? To transfer dividends to the DLA would make that a debtor. The figures are only a couple of thousand.